Having your office at home

RicardoSmith

Whats the pitfalls if when running your own business you base it at home with your office in a spare room etc.

Specky

Many and varied pros and cons. It suits some people but not others.

I'd say some of the significant problems are:

1. you are always "in work" so the temptation is to always work
2. if you want to employ staff they are in your home
3. it doesn't look good to clients

Of course, the impact of these problems varies from sector to sector and person to person.

There are kind of positive things too...but they're mostly sort of negative positives...ie you can work longer hours (you never get away from work), less travel (never going outside the door) etc.

Some financial benefits are obvious. Charge more household overheads to the company, share resources between business and domestic etc.

It suts some people. but it can also be desperately lonely for others.

De Rebel

Originally posted by RicardoSmith
Whats the pitfalls if when running your own business you base it at home with your office in a spare room etc.

Pitfalls: Personal/Social

• Can make it difficult for you and others to draw a line between working time and social time
• Can be difficult for others to respect that you are working and need to be allowed at it - "can you mind the child, pick up the dry cleaning, wait there till the repair man calls" etc
• Can, if there are others (esp family/partners) living in the house, lead to tension/friction due to a lack of "personal space" and time apart
• Can lead to social isolation from one's business peers (and for those who work from home when working for a company - can lead to a "dangerous" gap opening up between you and the office politics!)
• Depending on the nature of your business your neighbours may not be pleased - i.e motor repairs, delivering sand and gravel, running a brothel, anything that causes a lot of traffic movements/parking issues

Pitfalls: Financial

• Need a good tax advisor to explain what is acceptable in terms of expenses - i.e. proportion of your esb/phone/heating/etc bills which may be allowable against income tax and VAT. Don't try claiming for the lawn mower, for example.
• Can cause your house to become liable to local authority rates
• Can cause certain other profiteering scumbags (e.g. private refuse collection companies) to attempt to treat you as a business and charge you commercial prices
• Can have capital gains tax implications
• If the house is rented you would need to ensure that "use for business purposes" is not excluded in the rental contract
• You would need to review your House Insurance and ensure that you have cover for use for the purposes of your business, especially the Public Liability, Material Damage, Money and Computer sections. Do NOT accept a verbal assurance about this. At the very least ask your broker/insurer to note the nature of your business and the fact that it operates from your home on the policy schedule. For example householders PL is very different to commerical PL. Hibernian Insurance (who I am not associated with) have a home/office policy which is an extension of a standard household policy
• Again, depending on the nature of your business, wear and tear could be an issue.
• Like all businesses you will need a Safety Statement

You asked only for the pitfalls. The advantages are many, none of the above are showstoppers and I would strongly recommend it. It certainly offers you the opportunity to get your business up and running without the overhead of an office and all that goes with it.

There used to be an outfit known as the Irish teleworkers Association who published a manual, I'm not sure if it is any good - might be worth contacting them.

ednwireland

hibernian refused to extend my policy to cover my home office the morons that my broker rang just refused to quote - didn't bother in the end also not insured with hibernian any more

finnpark

Specky wrote:

Many and varied pros and cons. It suits some people but not others.

I'd say some of the significant problems are:

1. you are always "in work" so the temptation is to always work
2. if you want to employ staff they are in your home
3. it doesn't look good to clients

Of course, the impact of these problems varies from sector to sector and person to person.

There are kind of positive things too...but they're mostly sort of negative positives...ie you can work longer hours (you never get away from work), less travel (never going outside the door) etc.

Some financial benefits are obvious. Charge more household overheads to the company, share resources between business and domestic etc.

It suts some people. but it can also be desperately lonely for others.

What would you know? Get a life.

Merrion

Does the smoking ban apply if you have one room of your house as an office?

finnpark

It does if specky says so...no argues with Specky as he has issues.

seamus

Merrion wrote:

Does the smoking ban apply if you have one room of your house as an office?

If your home is registered as a place of business, then yes, you have to abide by the same laws as any others as regards smoking, health & safety checks, etc.

RicardoSmith

If you register you home as a business address, does that effect home insurance cover? Also If want to add a second line purely for business use does that cause any issues?

Specky

The insurance implications depend on the type of business you are running.

Strictly speaking you should be insured as a business if you are a business.

Don't forget that if you buy insurance as an individual you are paying it out of your take home pay, so you've had to earn a lot more than the cost of the insurance before you've got enough money to pay the insurance bill.

If you pay it from your business it is an overhead so comes out before tax. Essentially it is costing you less.

If your business never receives visitors on your premises and you have no staff then really you don't need public liability insurance (which will come as part of your premises insurance).

If your company's total assets are a pc and a desk you can easily enough squeeze them in under the radar on your house insurance if anything happens to them. You won't be covered for much more than that though and you won't have things like business continuity insurance which is a life saver if anything horrible happens.

The only problem with getting extra lines, even dedicated business ones, is that you have to deal with eircom and all the hassle that goes along with it.

It is best to get a business line on a seperate bill for the business though. Even though it is in your house and there is a potential for you to use it for private calls it is a lot easier to convince the auditor you only use it for business if it is seperate and you haven't got to go through mountains of bills crossing out all the midnight phone calls to your Auntie Gemima in Darkest Peru...

Victor

Specky wrote:

If your business never receives visitors on your premises and you have no staff then really you don't need public liability insurance (which will come as part of your premises insurance).

Not 100% true, in the course of your business, you could, say, push someone off the roof of a building, maiming them.

Your insurance may not cover you.

RicardoSmith

Would it affect my current insurance if I register my home address as my business address? Do I even need to do that if I stay as a sole trader?

Specky

Not 100% true, in the course of your business, you could, say, push someone off the roof of a building, maiming them.

but in the context of insurance of your premises you don't need to insure against problems with other people if other people don't come on your property.

If you work away from your property then your company should have PLI to cover you in case a third party is injured but that's a different issue.

If you pushed someone off a building your insurance wouldn't cover you anyway because you've committed a crime.

Victor

Specky wrote:

If you pushed someone off a building your insurance wouldn't cover you anyway because you've committed a crime.

Eh, knocked someone from a building.

finnpark

Very good point Victor. I agree with you. :cool:

Specky

Eh, knocked someone from a building.

but there were no witnesses..... :eek: