Although the practical implications of running a home based business are more likely to be at the forefront of your thoughts when setting up a home based business, ignoring the deeper issues such as tax and health and safety could prove disastrous in the medium or long-term.
It is possible that any room or section of your property that you have designated as being used for business purposes may be subject to business rates, as opposed to council tax. This is not necessarily the case and it depends on the level of commerciality that your property has undergone. Each local authority is likely to have its own opinion on this and local advice should be sought.
However, as a general rule, if you simply have a computer and a filing cabinet in an existing room within the property, this is unlikely to require you to pay business rates. If, on the other hand, you have altered an outbuilding into a workshop and this is used as your premises from which to sell items, it is much more likely that you will be liable for business rates.
In a similar way, if you are using a part of your house solely for business purposes, this proportion of the property may be subject to capital gains on the sale of the property as it would no longer attract the private dwelling exemption.
On a more positive note, you will be able to claim back a proportion of your domestic bills against the business, thus reducing your liability for corporation or income tax.
When you are conducting a home based business, health and safety can become a really tricky issue to deal with. This is certainly the case if you have others such as employees or clients regularly visiting your premises.
As a first step, you should conduct a risk assessment to determine what, if any, hazards you should be aware of and how you can potentially mitigate the hazard. Always make sure that you have suitable fire equipment such as an alarm and a fire extinguisher as well as a substantial first aid kit. Make sure that your insurance is changed to reflect the added the dangers of having third parties on site, so that if the worst does happen you will not be financially out of pocket.
If you have employees on site, you must make sure that they have suitable workstations and that they are not placed in unnecessarily difficult working conditions. This can prove difficult, particularly if space is limited, so make the most of space saving equipment that is now readily available.
Contact the Health and Safety Executive if you would like assistance in this matter.
Complying with detailed tax and health and safety requirements can be a real headache, but never overlook this aspect as failure can be very costly;
Depending on the magnitude of your business, you may be liable to pay business rates and capital gains tax if the property is sold;
Health and safety becomes particularly important if you have third parties visiting your premises such as clients or employees;
Always make sure that you have adequate insurance for your chosen business.