Entrepreneurship

Can I run a business from home?

Cameron Fleming | 1 November 2021 | 2 years ago

Can I run a business from home

The business world has changed enormously in the last two decades, and the rise of the internet has created huge opportunities for entrepreneurs to run their businesses in unconventional ways. One of the biggest changes in recent years is the number of startups that are being launched from people’s homes. There are many advantages to running your own business from home, such as being able to work flexible hours, save on office space costs, and enjoy a less stressful environment.

But how easy is it to start a home business? And what do you need to get started?

For everyone who is reading this and wondering, “Can I run a business from home?”, this step-by-step guide will explain everything you need to know.

1. Think of a great home business idea

There are many questions that can help guide you towards finding the ideal home business idea:

  • What skills do I have?
  • What knowledge/expertise can I offer that others don’t know about?
  • Is there something people aren’t doing properly at the moment?
  • How can my talents be turned into valuable products for customers?
  • Can I make any existing ideas better than they currently are?
By answering these questions, you will be able to identify an idea that is unique, useful, and potentially profitable. Particularly if this is your first business, it is usually better to stay within your comfort zone than attempt to form a company around something you have no experience in.

2. Conduct market research

Once you have your idea, the next thing you will need to do is conduct comprehensive market research to identify the best way to attract customers to your product or service. You will need to understand who your target customers should be, what they want from a potential company, how much they would be willing to pay for what you are planning to offer, and how you can stand out from the competition.

This can be a lengthy process that may involve speaking directly to potential customers about their requirements, but there are also several ways you can conduct market research from home. For example, Google Trends can tell you if people are searching online for products similar to yours. This will show you if there is demand in the marketplace. You can also use social media analytics tools like Hootsuite or Buzzsumo which will show you where your potential customers are spending their time online.

3. Research your competitors

Once you have done your market research, you will then need to find out as much information about your competition as possible. This will help you to identify areas where you can offer customers something better than your competitors. Think carefully about how your competitors present and describe their products or services online – do these descriptions highlight any weaknesses that would give you an advantage? Do they charge too high a price? How does their product compare with yours in terms of quality and value for money?

You may even want to contact some of your competitors’ customers directly through platforms like social media. By finding out all this vital information early on, you will be able to identify a unique selling point that will give you an edge when you launch your new business.

write your business plan

4. Create a comprehensive business plan

Every startup needs a business plan to create a clear path forward, budget how much capital is needed and present your idea to potential investors. Your business plan needs to be as comprehensive as possible with no detail too small for inclusion.

Here are some of the main points you need to cover in your plan:

  • Goals – What are you hoping to achieve with your business?
  • Costs – How much is it going to cost you to get started and keep the company running each month?
  • Operations – How will you be able to run your business from home? Will you need any special software, employees, or additional resources?
  • Projections – What are your one-year, two-year, and five-year forecasts? The projections should be clearly labelled so investors know which period they are viewing.
  • Marketing Strategy – What marketing efforts do you have planned for acquiring customers and clients? How do these plans fit with what you learned during the research phase?

5. Choose a business structure

Once you have done your research and created a business plan, the next step will be to choose what type of legal structure your company will take. This choice will also determine which laws apply for tax purposes and how much paperwork is involved in running the company.

The main options available for your home business are:

Sole proprietorship

This means you will be the sole owner of your business without any legal distinction between the business and you personally. This means that you will have unlimited liability for any debts incurred during business operations. Most new businesses start as sole proprietorships because it is the simplest form of organization to establish.

Partnership

This is where two or more people share ownership of a business. A partnership is like a relationship between shareholders in that all partners are exposed to unlimited liability for company debts. As with a sole proprietorship, partnerships require no legal paperwork and fewer fees need to be paid.

Corporation

A corporation exists separately from its owners with shares of ownership held by shareholders who have protection against personal liabilities incurred by business debts. Corporations require more time and money during setup than other structures because articles of incorporation need to be filed so you should seek professional advice before making this choice.

Limited Liability Company (LLC)

An LLC offers the same limited liability as corporations but is taxed like a partnership or sole proprietorship. This means that the LLC itself does not pay taxes, but the profits are distributed among partners or owners so they can be taxed on their personal income. Many small businesses progress from a sole proprietorship or partnership to an LLC after they are well-established in the marketplace.

6. Register your business

There is no single register for all UK businesses – you need to check with each authority for information on how to set up and where to go. The good news is that this will only take a few minutes online using the official Companies House UK website which has resources available in both English and Welsh. If you are setting up as a Limited Liability Company (LLC), then it may be necessary to contact HM Revenue & Customs (HMRC) directly since this type of company falls under self-employed taxation laws instead of standard corporation tax rates.

If you are unsure about how to register your business, or which structure is the best choice, speak to an experienced business lawyer who will be able to help you make the right choice. If you make a mistake on the registration it could cause potential tax and legal issues so it is always worth spending a little extra time and resources ensuring that everything is done correctly.

7. Open a business account

All business owners should open a business account as soon as they start trading to keep the company’s finances separate from their personal accounts. Setting up a business bank account is relatively simple and will provide your business with many benefits down the line. Once you have opened the account, you will be able to set up online banking so that you can take care of everything from home.

Here are some of the unique benefits of a business account compared to a personal account:

  • You can claim tax deductions for business expenses
  • Payments are easier to keep track of since you will have both company and private accounts
  • You will have access to more different types of loan options than with a personal account
  • You will be able to get a business overdraft which is usually larger than a personal one
  • You can get a business credit card which will have more favourable rates
  • You will be able to set up direct debits for your business which can save time on some payments

secure investment

8. Secure investment

As noted above, you should have calculated all of your startup costs in your business plan before going ahead with setting up the company. Some small business owners use their own personal savings to get started as this doesn’t require seeking outside investment and guarantees them full financial and operational control over the business. However, you may not have your own startup funds or you may not want to risk your personal assets, in which case you will need to secure investment to cover your costs and grow your company.

Here are some of the options available:

Personal loan

If you have good credit, a personal loan may be the best option because it requires no collateral or business credit score. You will need to pay interest on these loans which can be expensive so make sure you read all the small print before signing. Personal loans are most often used for funding sole proprietorships or partnerships because there is no legal distinction between the owner and the company with these business structures.

Business loan

A business loan may be a good option if you are setting up an LLC or corporation. You will need to prove your creditworthiness and submit financial statements, but once approved, a business loan can help you get started or provide the finances required for growing your business.

Angel investor

An angel investor is an individual who provides money to a new business in return for equity or partial ownership. In order to convince an investor that your new company is worth investing in, you will usually need to show them your business plan and successfully pitch your idea (think Dragons Den!) Just make sure you are up to scratch with all of your numbers because nobody wants to invest their money in someone who can’t explain what it will be used for.

Crowdfunding

Crowdfunding is perhaps the newest way to secure investment for your business. Websites like Kickstarter have made securing startup capital easier than ever before because companies can offer potential investors product pre-orders or other incentives in return for their money. It also enables you to secure very small donations from multiple investors which provides you with the money you need at low risk for the individuals funding you.

9. Set up your home office

For many people, being able to work from home is a dream come true. You can choose your own hours, save time and money commuting, and devote more time to your family and home life. However, as with your personal and business finances, it is important to create a distinct work environment when you are running a business from home. Here are two things to consider:

  • Plan your home/work schedule – Try to plan set times when you start/finish work, take a coffee break, have lunch etc. This will enable you to stay productive which is a common problem many people face when working from home.
  • Choose business software – There are various software solutions apps designed specifically for remote workers which can help you to effectively run your business from home. These include email facilities, project management software, file-sharing systems, and communication and conferencing software.

work from home

10. Sort out your business taxes

As with all businesses, you will need to keep records of your business expenses and earnings throughout the year. If you are running a sole proprietorship or partnership it is important not only to save receipts for items like office supplies but also tax return copies that show how much money you earned. This information can then be used when filing self-employment taxes at the end of the year.

If you are unsure about what type of taxes your business is supposed to be paying make sure you speak to a tax accountant. There could be serious fines to pay if you are found guilty of tax avoidance so it is not worth taking the risk.

Final thoughts 

It has never been easier to start and run a business from the comfort of your own home. For everyone asking themselves, “can I run a business from home?”, make sure you follow these ten steps, and you will give yourself the best possible chance of success. 

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