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Running a business from home is not fundamentally different from running a business anywhere else. Well, maybe a little different in that you have lower overheads and a shorter commute.
But you still need to show up every day, get the work done, find your customers and clients and take care of your accounting. The accounting is where a lot of home business owners trip up, especially if the business is a new venture.
In no particular order, here are some of the things you need to know.
All businesses, regardless of profit levels or if the business is a side-line to a regular job, need to be properly registered with HMRC.
It’s a relatively simple process; they basically want to know who you are and what you’re doing if you’re self-employed or a sole trader. Once you’re registered you get a set of unique numbers that let you into the HMRC gateway where you’ll file your tax return online.
There is plenty of information on the HMRC website to guide you through the process, but if you’re at all unsure you can ring them up and ask.
Alternatively, if you prefer more personalised advice, speak to a startup accountant. They can run you through what you need to know, what you need to do, and offer the services to properly register your business, then help keep cash flow and accounts running smoothly.
You’ll generate financial records regardless of your business type. Even those who offer computer-based services need to send out invoices and pay their business expenses.
If daily accounting is something that gives you shivers, look for professional help. You could hire a part-time bookkeeper (maybe someone else who runs their own business from home) for a couple of hours each week or month to keep your records up to date, then turn to an accountant for help compiling and filing your annual self-assessment return.
If you want to keep your own business finance records, keep it as simple as you can. There is lots of fancy software out there that will ask you to include all kinds of information you may not need: things like VAT, payroll, import and export records, or anything related to limited companies (unless yours is a limited company, of course). If you’re looking for a software package to run on your own computer, make sure you know what you need so you don’t overspend on something too complex.
Online accounting software such as Quickbooks, Freshbooks, FreeAgent and lots more, can help with daily record keeping. They can sync with your bank to update automatically, and some will even gather needed information for your tax return.
Alternatively, you can keep your details manually. Use a ledger or notebook if you like physically writing, or open a spreadsheet if you prefer to keep things as paperless as possible.
Tempting as it is to run everything through your personal bank account, it’s not the best solution for businesses
It’s quite easy to open a bank account for your business, and you won’t need any special paperwork or a business plan unless you want to borrow money or have an overdraft. You may find the first year or so is free, so it’s not likely to place any extra expense on your business operations.
Keeping accounts for a small, home-based business doesn’t need to be complicated or take up hours of your time. But you do need to know a little bit about what’s expected. Not only is it a legal requirement, keeping your accounts help you run a more profitable venture.
This is a collaborative post.
Welcome to Birds and Lilies! I'm Lou: mother, blogger and freelance writer. This is my lifestyle blog, where I talk about motherhood, infertility and IVF, beauty, my love for food and wine, as well as my thoughts about stuff, and our real-life and travel adventures.
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