Looking to set up your own business but not quite ready to get a proper office? You can definitely run your company from home, once you've taken care of a few details.
The coronavirus pandemic has forced us all to reconsider the role our home plays in our lives; many of us have needed to get used to sleeping, eating, working and chilling out in the very same space.
It has also changed what “work” looks like for many people, who have had to rethink and adapt their roles, and perhaps go freelance.
So, what if you have your own business, or are about to launch it? Can you run it from home at all? What administration do you need to sort out? What are the potential obstacles?
Is it legal to run a business from home?
Generally speaking, yes. There is no law stopping you from turning parts of your home into your business premises.
However, depending on the type of home you live in and the type of business you are looking to run, you may need to ask for permission and make a few administrative changes.
Running a business from home: Key considerations
Whether you’re looking to set up a brand new business, or to permanently move out of your current premises, before you start running your business from home you need to think about a few things:
Permissions. Whether or not you need to ask for permission before setting up your business at home mostly depends on the type of house you live in. We’ve covered this more in detail below. You may also need additional permissions from the local planning office (if you need to make big changes to your home) or the local council (for example, if you need a licence for your business, or if you want to advertise it).
Business rates. In addition to your Council Tax, you may have to pay business rates on your premises. You can check with the Valuation Office Agency (VOA) whether that’s the case.
Taxes. You can claim a proportion of your house costs back in your tax return if you run your business from home, just like you would on your regular business premises. Think things like heating, electricity, broadband and so on.
Insurance. Your home insurance will likely not cover your business, so you may want to consider business insurance.
House types
Depending on what type of house you are planning on using and whether you own it or rent it, you may need permission from different people to turn it into your business premises.
Running a business from a rented house
If you are renting your house from a private landlord, you should normally get their permission to run your business from there, especially if your activities may cause noise or risk damaging something, say, for example, the floors or some furniture.
The landlord cannot “unreasonably” deny their consent, as long as the property is still used primarily as a private house. But they may do so in some cases, for example if they believe that your activities would in practice turn the house into a commercial property. The line between the two is a bit blurry, but that might be the case if, for instance, the property looks like a commercial let because of advertising outside.
Also check whether your rent contract says anything about using the house for business purposes. If it’s not allowed, but you then get permission from the landlord, make sure to have the contract changed.
Running a business from a council house
The considerations on running a business from a council house are not unlike those regarding running a business from a house rented from a private landlord.
You will need to both get permission from the council or the housing association, and to make sure your contract doesn’t prohibit it. They should normally agree but might refuse if your business activities could damage the property or cause nuisance to the neighbours.
Do also check what consequences running a business from home might have on your housing benefits or council tax.
Running a business from a property you own
If you own your house, things are a bit easier, but you still need to check a couple of things. Residential mortgages don’t usually allow the property to be used for business purposes, so if you have one, you may need your lender’s permission before getting started.
You should also check your property title to make sure there are no legal restrictions on using the property for commercial purposes.
Finally, you may still want to think about whether your business will cause you trouble with the neighbours, who may have grounds for a lawsuit if you damage their property or cause significant nuisance.
Running a business from a garage or shed
Running a business from your garage or shed is also legal.
The rules are pretty much the same as for running a business from a house, and depending on whether your property is your own or rented, you may need to ask for permission.
Finally, don’t forget that you will need to manage health and safety for your home-based or garage-based business, just as if you would if you had dedicated business premises.
How a business bank account can help
Even if your business is small and you are just running it from home, you will need a business account to manage the financial side of it (particularly if you are setting up the business as a limited company and not as a sole trader).
There are a range of business accounts for small businesses out there, many of which can be opened and set up fairly quickly for a reasonable price. You may especially want to look at online business accounts, which you can open and manage from home too.
A business account will help you separate your personal and business finances, keep track of payments and expenses, and facilitate invoicing and accounting.
How business insurance can help
As we mentioned, it’s unlikely that your home insurance will cover your business activities, so it may be a good idea to get dedicated business insurance.
There are different types of business insurance that may be suitable for you depending on what your business looks like. For example, you may want to take out business contents insurance if you have expensive equipment, to be covered against things like theft and fire.
You can learn more about what types of business insurance exist and how they work in this guide.
Frequently asked questions
The Health and Safety Executive (HSE) is the UK government agency that deals with workplace safety. Have a look at its website, which has a lot of information on covering health and safety basics for your business.
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Valentina Cipriani was a writer at Finder UK. She wrote news, features and guides about banking and credit cards, helping people to improve their financial lives. She holds an MA in International Journalism. See full bio
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