The Legalities of Starting Up a Home Business

Being at home and taking care of the kids – while amazing – can also get boring, especially if you were previously used to bringing in a pay packet every week. Have you ever considered inventing your own job and starting a business from home? About 60 per cent of all businesses start from home.

I learned (the hard way) there are some legal difficulties you have to contend with. The laws differ between countries, so check your local government website for a full list of the laws relating to home businesses.

 

Can I Start It? 

Here are some of the things you have to think about when starting a home-based business. All of these things could potentially stop you from starting up.

·         Leasing agreements prohibiting home-based businesses.

·         Lack of space and no chance of getting planning permission.

·         Neighbour complaints over deliveries, client visits, and any smells coming from your property.

·         You need a licence to start in your chosen field.

 

Licences

 In the UK, you’ll only need a licence if you are setting up certain types of business, such as if you’re selling anything dangerous or operating something which requires skill-based qualifications. The UK, luckily, is very lenient on these things.

 In the US, you always need a licence due to zoning laws. Over there, every part of a city is listed as residential, commercial, or industrial. Any overlap and you’ll need a licence. In Australia, you also need to obtain a business licence from local government.

 

Space

 The first thing you might need for your business is space. If your current home doesn’t provide this, you’ll have to consider expanding. This is where things can get tricky from a legal standpoint.

 You could have to deal with long planning applications which may or may not be accepted. If you live in rented accommodation, you’ll have to work with what you have. All building and decorating decisions fall to the landlord.

 

Employees

 Mums with some extra money might want to hire an employee. It can really take the weight off your shoulders because you know you can take care of the kids without having to put your business on hold.

 There’s nothing stopping you from employing someone in a home-based business. You still have to adhere to all employment laws, though.

 In the UK, you’ll have to deal with the new pension laws. In the US, you’ll need to deal with things like your state’s minimum healthcare cover. Read up on employment law if you’re going to hire part-time help.

 Alternatively, you could hire them as an independent contractor. This means they handle their taxes and you have very little responsibility for their affairs.

 

Insurance

 Every business needs insurance. You can find a whole law dictionary on this field. With most home-based businesses, you can add a business clause to your current home insurance policy for a small fee. It’s much cheaper than taking out a separate business insurance policy.

 If you’re going to accept client visits, always have public liability insurance (or whatever the equivalent is in your country). This legally protects you if a client injures themselves on your property.

 

Taxes

You must register your business with the government immediately, and report your earnings annually. In the UK, you’ll report directly to Her Majesty’s Revenue and Customs (HMRC). If you’re choosing to register for VAT, you’ll need to register for this separately and adjust your prices to suit the current 20 per cent VAT rate.

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