Some rural businesses will mean you have to find premises, especially if you’re planning any sort of shop or other retail outlet. If you’re offering a service, anything from a manicure to a dry stone wall, then the chances are you’ll travel to see your client. Otherwise you have the option of working from home. It could be a spare bedroom, study, converted garage or barn, or shed at the bottom of the garden.

There are three big advantages to working from home:

• There are no long, expensive commuter journeys.
• You won’t have to pay for a lease or rent.

• Working from home allows you to start small and take on premises later if the business justifies it.

But there are three big disadvantages too:

• There’s no escape. It’s more difficult to leave work behind you, physically and emotionally, if your office is upstairs or at the bottom of the garden.
• Suppliers and customers who know you work from home will phone in the evenings and at weekends.
• Family and friends will not see your office as a work environment. They’ll spread toys around, play games on your PC and come and moan to you because you’re a captive audience and always there.

ARE YOU READY FOR IT?

Many people work well from home, settling into a routine and able to overcome distractions, everything from neighbours popping in for a chat to a crying child or a boiler repairman. For others it’s a total disaster. These are the people who can’t concentrate or motivate themselves easily and find they need the discipline of an office environment.

Unless you’ve worked from home before you probably won’t know which camp you fall into until you start. So before you commit yourself, some questions to think about:

• Are you disciplined and self-motivated or will you spend your days drinking tea and forcing the dog out for another walk?
• Are you independent and self-reliant?

• Can you think for yourself?
• Are you good at managing your own time or do you need someone to tell you what to do next?
• Do you prefer working in a structured environment?
• Will you miss office life, the gossip and the adrenalin rush when things go well?
• Will you get lonely?
• Do you need to bounce ideas off colleagues?
• Are you interested in new skills and able to pick them up quickly? A successful homeworker has to be flexible and able to turn their hand to most things.
• How are you technically? If you’ve previously only worked for companies that have in-house IT support teams, what are you going to do when your computer crashes, as it inevitably will?

THE PRACTICALITIES

If you’ve passed those emotional tests there are then the practicalities to think about:

• Do you have a spare room in your home, garage, garden shed or barn which can easily be turned into your work area?
• If so, does it have enough space for you to work, store your products or raw materials, and keep your paperwork in?
• If the room doesn’t have them already, is it easy to install extra phone and fax lines and power points to accommodate a computer, printer, scanner, fax and phone?
• Is it far enough away from your family’s living area to escape from noise and small children?

• Is the natural light good enough (especially important for tailors, artists and designers)?
• Are you going to be generating noise which could upset neighbours? Craftspeople’s tools and heavy duty sewing machines could be a particular problem.
• Are you able to easily move stock and equipment around? It’s not ideal if your furniture workshop is at the top of a narrow flight of cottage steps.
• What’s road access like? Will customers and suppliers be able to find you? Will they be able to park? Is increased traffic going to be a problem?

YOUR WORK SPACE

Working at the kitchen table is only a short term option. Soon you’ll get bored with getting everything out and then clearing it away again. Food and drink will be spilled across business letters and you’ll find the remains of last night’s supper congealing under your laptop. And after a while, as your business begins to grow, you’ll need somewhere to keep files, paperwork and receipts.

Think of converting a room and buying equipment as an investment in your future and not as a cost which will eat into your profits. A separate room also has the very obvious advantage of having a door to shut which should keep family out and allow you to symbolically leave work firmly behind you every evening. A separate phone and fax line should also help maintain a distinction between work and family life. You probably want to answer your business line professionally and not allow your five-year-old to get to it first.

HOW TO STAY SANE

Everyone works differently and your hours may be decided by the school run anyway. But consider the following:

• Try to start and finish at a set hour. Or have an unbreakable rule: ‘I will never work past 7pm’.
• Have two (or three or four) breaks a day.
• Make sure you still see people. This is particularly important if you live alone. Make a point of meeting a supplier, customer or client every week or two. It’s also good for business because it puts faces to names.
• Develop more friends socially because you won’t have work colleagues to fall back on.
• Treat work as seriously as you would if you were going out to work. Tell your family and friends that your piano practice or potting up of baby bamboos is just as important as sitting in an office staring at a screen.
• Set yourself targets and give yourself treats if you meet them. ‘If I finish this project by Wednesday lunchtime I can go for a walk/have a bar of chocolate.’ You need self discipline for this one.
• Ignore housework. If you were working in a formal office environment you wouldn’t pop home to unload the dishwasher or do some ironing, so why should this be any different?

Housework can be an issue, especially if your partner goes out to work. This is something to resolve right at the beginning, with you making it clear that just because your work space happens to be in your home it doesn’t mean that you automatically take on all the cooking, cleaning and childcare. How would you share the duties if both of you worked away from home? That should be your position at the opening of negotiations.

It’s important not to underestimate the demands of doing any sort of work from home. Some jobs will mean that once you’ve physically started you’ve got to continue to the end – baking, pottery or joinery for example. Maintaining your train of thought is critical too. It isn’t an effective use of your time if you constantly have to cross between work-work and house-work, so don’t commit yourself to anything until you’re sure you can cope.

Switching off

Ultimately, a successful homeworker has to learn to switch off. Many report that this is one of their biggest single problems. There always seems to be one last little job to do before going to bed, one last call to return, one last email to send, one final invoice to get out. No matter how much you love your job, you need to be able to escape from it, and taking a step back is good for business anyway because it allows clearer thought. It’s all about not blurring the distinction between work and home – even though they both happen in the same place.

PERMISSIONS

If you do decide to work from home you have to be careful you don’t infringe any planning conditions, leases or restrictive covenants. It’s important to check because if you do break any conditions the implications could be serious.

Much will depend on the nature of your business. If you’re an illustrator of children’s books and work quietly at the kitchen table then it’s not going to be a problem because no one’s ever going to know. If on the other hand you turn your cottage into a big restaurant and takeaway then it’s going to be rather obvious.

Many local authorities take a dim view of people running businesses from their homes, especially if it increases traffic or noise. This could be customers, suppliers delivering raw materials, or even extra trips you have to make in order to move stock or your finished product around. If you think this could be the case, speak to your local authority at an early stage to decide on the best way forward.

INSURANCE

If you’re going to work from home you’ll also need to check your insurance policy. Don’t give your insurance company the chance to wriggle out of any claim, which it could do if you don’t tell it about a change of use. Non-disclosure is one of the main reasons why claims are refused. It’s far safer to be honest and upfront about your business activities and change your insurance cover if necessary.

There are policies designed for homeworkers. Any high street broker should be able to help, or do an internet search. You may be able to bolt on a business element to your existing household policy.

If so, it will probably add about £130 a year to your annual insurance bill. If you have lots of expensive computer equipment it could be closer to an extra £300. Shop around though: some insurers recognise that homeworkers are a good bet because the property is occupied more often (less chance of burglary and fire) and adjust premiums to reflect that. If you have specialist tools or equipment you may need a more tailored policy. If you travel and take business equipment with you, such as a green energy consultant’s laptop or a landscaper’s tools, you need to make sure the policy includes those risks. Most professional and trade associations offer beneficial rates to their members.

Other risks to cover

As well as standard buildings and contents cover, plus business equipment in and away from the home, there are other risks you need cover for.

• Business interruption. If your home burns down, where are you going to work from? A good policy will cover you for a temporary office or studio, plus the cost of moving. Sometimes it’s included as standard and sometimes you may have to pay extra.
• Public liability. Vital if you’ll have any business visitors to your home. Again, sometimes it’s standard and sometimes you’ll have to pay extra.
• Employer’s liability. You’ll need this if you employ any staff.

COUNCILTAX AND BUSINESS RATES

If you’re working from home, there’s a thin line between when you should pay council tax and when you may have to pay business rates. If it’s still your home, and you’re only using one room, then you may end up paying both. This isn’t necessarily a disaster because business rates aren’t always higher than council tax.

The Valuation Office Agency (VOA) is the section of the Inland Revenue which deals with council tax and business rates in England and Wales. In Scotland it’s Scottish Assessors. (From April 2005 the Valuation Office will be an executive agency of Her Majesty’s Revenue and Customs. The Inland Revenue and HM Customs and Excise are merging.)

This is what its website says:

If you work at or from home, you should be aware that the accommodation within your home used as an ‘office’ may be liable to business rates whilst the remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).

There are many considerations that we must make in deciding whether a room in a house used as an office should be liable to business rates and each case is considered on its own merits. We will consider the effect of the extent and frequency of the non-domestic use of the room and any modifications made to the property to accommodate that use.

It goes on to say that a VOA member of staff will usually visit the property before an assessment is made. The website gives examples of how different cases could be judged.

Example One

A detached Edwardian dwelling in a residential area owned and occupied by a self employed solicitor who practices from the property, specialising in Matrimonial Law. The front room on the ground floor is furnished with sofa and comfortable chairs, has a TV set, and ornaments/photos of a personal nature displayed around the room. It is used on an occasional basis as a waiting room for clients during week days, and as the lounge by the occupier during evenings and weekends.

The former dining room is used as an office equipped with computer, dedicated fax and telephone line, filing cabinets, desk and shelving stocked with law books. No domestic use is made of this room. It is used by a part-time secretary when the solicitor is visiting clients or attending Court. The ground floor kitchen is used for preparation of family meals, but also to make tea or coffee for clients. The first floor accommodation of bedroom and bathroom is wholly used for domestic purposes.

The VOA’s assessment

The office is the only non-domestic part and will be assessed for business rates. The principal purpose of the front room is to serve as a lounge. In this instance, the non domestic use is sufficiently minimal so as not to warrant assessment for business rates. The lounge and the remainder of the dwelling will be banded for council tax purposes.

Example Two

An integral garage of an estate house is converted to an office with plastered walls, electric power points, solid front, suspended ceiling and floor screed suitable for carpeting. A separate telephone line has been installed. Access is through the hallway of the house. All toilet facilities are in the main house.

The occupier claims that the room is used by the family in the evenings and occasionally at weekends. During the day the occupier designs computer software. He is employed by a major company to work at home, because of a physical disability. All of the equipment has been provided by his company and is specially adapted for his needs. He visits his former office on an occasional basis.

The VOA’s assessment

The former garage is no longer domestic property. It has been adapted for office use and should be assessed for business rates. The remainder is domestic.

Example Three

The occupier is employed as a site finder by a major building company, and travels across most of the southern part of the country, using her home as a base, but calling into the company office once a week to pick up new instructions, for meetings, and to leave completed work.

She has a 4 drawer cabinet in the corner of a dining room, which also functions as an ‘office’ for the family computer, and there is no dedicated telephone line for business purposes. The occupier is out visiting sites 4 days a week, and does ‘writing up’ at home on the dining room table in the evenings and at weekends. No clients or members of the public visit the house for business purposes.

The VOA ‘s assessment

The whole of the dwelling is domestic property, and should be banded for council tax.

The website address is: www.voa.gov.uk/council_tax/ working_from_home.htm.

Another government-funded site has been set up, designed to put everything the small business ratepayer may need to know about rates and valuation in one place. Working from home is covered too. The address is: www.mybusinessrates.gov.uk.

Information on the site is for ratepayers in England only. Ratepayers in Wales, Scotland and Northern Ireland should talk to their central or local authority.

MORTGAGE TENANCY AGREEMENTS

It’s possible you could break the terms of your mortgage, or tenancy agreement if you’re renting, if you run some types of business from home. Check with your lender or landlord if you think this may be a problem.

OTHER WEBSITES

There are many other sites devoted to working from home. Many offer practical tips: others concentrate more on lifestyle. In most cases, get onto the site and do a local search on working from home. Some of the sites have case studies of homeworkers which are worth reading for the tips they give.

www.egrindstone.co.uk

This site downloads quickly, it’s good looking and professional and there’s plenty there.

www.homeworking.com

A site for anyone working from home, including the employed who work remotely away from the office. The site is fast and well-designed.

www.ivillage.co.uk

This site is aimed squarely at women, but there’s lots of good material on it which is relevant to anyone working from home. The site is slow to download and the layout is a bit fussy.

www.startups.co.uk

This is thorough, packed with everything you’d ever need to know about the practicalities of working from home, but rather dull.

www.businesslink.gov.uk

This site is aimed more towards the employer and employee working remotely from home rather than the freelance, but there’s still plenty of detail here.

www.wfh.co.uk/wfh/index.htm and www.workingfromhome.co.uk/wfh

These are basically sites set up by British Telecom to sell you all the gizmos you’ll need. Useful perhaps if you need equipment to get started, but shop around.