MILLIONS of home businesses have received a boost with the launch of a government scheme aimed at slashing costs and cutting red tape.
Introduced on August 15, the Home Business Initiative reduces the rules and paperwork needed to run a company from your home, as well as scrapping business rates for the majority of home-based firms.
It is also designed to make it easier for those living in rented accommodation to run businesses, by changing tenancy agreements.
Self-employment in the UK is now at the highest level since records began, with Office for National Statistics figures showing that more than 4.6m people now work for themselves.
Home businesses are also booming. There are now 2.9m, with 500,000 being launched in the past four years. In fact, some seven in ten companies start off around the kitchen table, and home businesses make up a massive 59% of all UK small companies — powering the economy to the tune of £300bn a year.
Reasons for the boom include the increasing availability of sophisticated technology to individuals, such as super-fast broadband and services such as Skype. Emma Jones of Enterprise Nation, a business network, said: “There is a growing movement that is responding to the new opportunities technology brings.”
But while some companies that started off in people’s homes are now household names — drinks manufacturer Innocent and hairbrush brand Tangle Teezer both had humble beginnings — many people running them are short on cash and time.
The Home Business Initiative
Launched by the enterprise minister Matthew Hancock, the scheme is the government’s latest attempt to help grow the number of small companies and help them become successful.
The changes being introduced include scrapping the requirement for planning permission to run a home-based business.
Kate Schmit, partner at the law firm Stevens & Bolton, said: “The initiative will be useful as it clarifies the rules and will help to reduce the amount of red tape involved in running a home business.”
However, there have been calls for the government to offer further incentives, such as tax breaks for home businesses that employ staff.
Department of Business, Innovation & Skills figures indicate more than 300,000 jobs would be created if even just one in ten home businesses took on an extra employee.
Tips for home workers
Running your own business is never easy, and home businesses are no exception to this rule. So whether you are a sole trader or head of a home business empire, it makes sense to keep costs to a minimum.
One way to do this is to ensure you are getting the best value for money on everything from home energy and broadband packages to insurance.
Axa Business Insurance claims that home workers could save almost £1,000 a year by shopping around for these services using price comparison websites.
To pinpoint the best deal, however, you will first have to decide whether you need a business or domestic plan.
When it comes to your broadband connection, for example, the top business deals are generally about £4 a month more expensive than the cheapest ones for domestic customers. But you receive dedicated customer support, and may get a faster connection at peak times.
With insurance, it may well be sensible to pay the extra £30 on average to add business use to your home policy as otherwise your equipment and public liability needs may not be covered.
Kevin Pratt, at comparison website Moneysupermarket, said: “The size and scale of the business will often dictate whether you have a domestic or commercial supply for insurance and utilities.”
Another easy way to boost your profits is to minimise your tax bill by making the most of your allowances — while staying within the law.
Self-employed workers can claim tax relief on everything from “use of home” to business travel, stationery and accountancy services.
Schmit said: “When filling in your tax return, you should ask yourself whether you are taking advantage of any allowable deductions, such as your phone bill.”