5 Things to Consider When Starting a Home-Based Business
5 things you need to know before running a business from the comfort of your own home.
Running a business from home can be a great way to balance work and lifestyle and avoid the high costs associated with renting a commercial property. LawPath can assist you not only with starting your business, but also everything else that comes along with running it from the comfort of your home.
If you’re thinking about joining the 1 million Australians who already run their business from home, read on.
1. What council approvals will you need (if any)?
Each local Council has different rules and regulations around running a business from home. For example, one Council may require a permit to be granted to start running a home-based business in the first place, whilst another may only if it is in a particular industry. It is also important to check with the Council that your business will comply with Local Government Area (LGA) zoning regulations. You can find your local Council’s details here.
2. Insurance, insurance, insurance
It is important (as with any business) that you have insurance to protect your business if anything happens. For many businesses run out of home, house and contents insurance provides adequate protection. This is especially important if you will be purchasing or hiring any specialised equipment to run your business. Depending on the nature of our business, you may also need to take out professional indemnity insurance.
3. Are you renting your property?
If you are renting your home, you will need to get the approval of your landlord before operating a home based business. This is because your agreement with your landlord is by definition based on ‘residential tenancy’, meaning that the purpose of your property is residential, and not intended for commercial gain. This is normally not an issue, provided that your main use for the property will still be residential, but is is important to note that landlords can still decline these requests. Some residential tenancy agreements may even have a clause stating that running a business from the property is in breach of the lease agreement.
4. Will you make any alterations to the property to operate the business?
If you plan on making any renovations to your home, using your property to advertise, or making any other alterations for the purpose of running your business, you may need to apply for a Development Approval from your local Council. If this is the case, your neighbours will also be notified of your proposed changes. As long as your proposal does not impede on your neighbour’s or Council property, your application should be approved. It is worth bearing in mind though, that Council approvals can take a long time to be approved. If you are renting your property, you will need to obtain the approval of your landlord before undertaking any renovations or making any alterations to the property.
5. What business structure and name?
Depending on the structure of your business, your tax obligations may change. If you wish to register your business as a sole trader (as with many businesses run from home), your tax will be calculated according to your individual income level. At the moment (2018), the tax-free threshold is $18,200. If you and your business make this amount or lower, you will not be liable to pay any tax. The flipside of this is that if you run your business as a sole trader, this will also mean that you will be directly responsible for any liabilities your business may incur. If you intend on registering a company, you will be liable to pay company tax.
Finally, as with any business, you will need to come up with a catchy name that not only represents what your business does, but draws your customers in. Registering a business name can be a time consuming and complicated process, but you can find an inexpensive and simple way of doing it here.
Running a business from home requires careful planning and organisation, but the benefits that come along with operating a business from home are enormous. Beyond saving costs on renting a retail or office space, you will save money on the costs of commuting to and from work, and have more freedom to pick and choose your operating hours.
Jackie is the Content Manager at Lawpath and manages the content team. She has a Law/Arts (Politics) degree from Macquarie University and is an admitted solicitor in the Supreme Court of NSW. She's interested in how technology can help shape the future legal landscape.