Setting up a business from home

[J T Framing]

We are in the process of setting up a small framing business from home. I have spent a lot of time trying to find information on line with not much success, then had a 'Eureka' moment this morning realising I should ask all my questions on this forum!
Until recently we have encountered problems with second hand equipment so have not really been able to get going properly. We have however framed pictures for friends at very little charge ( if indeed any) in the hope that they will spread the word.
So far we haven't registered the business. Am I right in thinking that this is quite urgent?

[Graysalchemy]

Welcome to the forum.

First bit of advice charge for you work at a proper going rate, one which you can build a business on and not a hobby. Its easier to discount a price than to up it when you realise you are not making enough.

Its all well and good charging mates rates but if you want these people to spread the word the last thing you want is for them not to have knowledge of a realistic price, you can imagine the conversation when they are asked how much it cost them.

Be fair and realistic with your pricing.

With regards to setting up your business my bit of advice is always to get a good accountant, that way you won't get shocks further down the line regarding tax etc. Secondly you will be running a commercial business from domestic premises, which can have implications on insurance, council tax, waste collection (its commercial waste not household) even your mortgage. Most people probably get away with it but that doesn't mean that it is right or you wouldn't have problems if you were to claim against your house insurance for a fire or something. Just worth bearing in mind thats all.

Finally you will need public liability insurance and also make sure that your vehicle insurance allows use of the vehicle for business use.

[J T Framing]

Thanks for that. Does the business have to be officially registered anywhere - eg with the Inland Revenue or any other government department?

[David McCormack]

Does the business have to be officially registered anywhere - eg with the Inland Revenue or any other government department?

Yes!

Once you start earning money that isn't taxed (ie PAYE) then you need to pay the tax yourself. You do this through self assessment and you will need to register as a sole trader or partnership.

Plenty to read here: https://www.gov.uk/set-up-sole-trader/register
and here: https://www.gov.uk/set-up-sole-trader/overview
and here: https://www.gov.uk/working-for-yourself

[Graysalchemy]

It is worth speaking to an accountant, best thing I ever did was get an accountant and set up as a limited liability company saved me thousands over the years in tax.

[Jamesnkr]

No point in a company if you're not going to make more than £15k p.a. profit. Start out as a sole trader, and at the point you've made 10k profit in just a few months THEN you set up a company. You'll have lost nothing up to that point, and you'll have saved a load of faff - particularly if you don't make a success of it.

[J T Framing]

Thank you for your advice.

[prospero]

I never actually 'registered' with any official body. Just opened a business account and paid in a float.
I started off working from home but managed to find a rented workshop after a few months. I do remember having a chat with the Tax Man to thrash out a few things. What proportion of car use was work' and things like that. If your turnover is below a certain level, you don't need to register for VAT, but as the chargeable work you do will be mostly labour it's maybe best to avoid it. Although if you are doing regular dealings with other VAT registered customers it can make life a bit simpler sometimes.
Never used an accountant. Works for some folks but it depends on your set up and aspirations. The paperwork for a small business is basically simple, but if you employ people or are involved with import/export and stuff like that it will get more involved and that's when you need an accountant to pick the bones out of it all.
Have a word with the local council and they will probably send a guy round with a clipboard and a tape measure who will work out figures as to your business rates liability. You may even get a reduction in your domestic tax.
As mentioned previously, get your insurance worked out. What level of cover you need for equipment/stock is up to you, but make sure you have plenty for 'work in progress' goods held in trust. This is going to vary from day to day, but try and work out a base figure. Most insurers will happily provide temporary extra cover for when you have more valuable stuff on the premises for a short time.
If you have customers visiting make sure you have Public Liability cover.

[Jamesnkr]

The VAT registration threshold is £82,000 currently. If your supplies are below that level then unless the majority of your supplies are to VAT registered businesses you should NOT register for VAT.

With regard to business rates the council won't care until you've so many visitors you have a problem with the planning department and parking etc. https://www.gov.uk/introduction-to-busi ... ng-at-home

[Graysalchemy]

I don't think it is a case of so many customers but any customers also the fact you have a workshop with noise etc.

You are better off coming clean in the first place than waiting for it to cause a problem IMHO.

[Jamesnkr]

I don't know what you do when framing pictures, but the loudest noise in my "workshop" is my cursing when a piece of glass smashes! IIRC you have a double-mitre saw and huge extractor.

Number of customers (with ensuing parking issues) and noise are planning issues; once you reach this point your problem is that you probably won't get planning permission for a home workshop, and thus the business rates won't be due.

A much bigger problem is that if you use any part of your home exclusively for business purposes then you will be liable to CGT on that part of the property when you sell it. The recommendation is that you should always have a bed/sofabed in any bedroom used as a home office, thus you can easily demonstrate that there is not exclusive business use. And HMRC do take this point.

Since the VOA lost a case against Eileen Tully about a decade ago, they are quite relaxed about home business use that goes on without causing any fuss.

[Graysalchemy]

So you don't have a compressor or use any power tools at all? You don't take deliv9eries from lorries or vans?

[233ART]

All this is ok until a neighbour complains to the Council.Get it done legally...

[Graysalchemy]

Thats my point it only takes one malicious neighbour. My neighbour at home wanted to set up a welding business in his garage, which was no problem to us but some neighbours started to complain about the hum of the welder and the flashing light. He ended up taking on an industrial unit which was really out of his budget.

[Jamesnkr]

So you don't have a compressor or use any power tools at all? You don't take deliv9eries from lorries or vans?

Compressors can be quiet, and the only power tool that comes into my framing is my battery powered drill. But then I don't have a business of selling picture frames to third parties which if on a big scale could lead to a compressor running non-stop. From the sounds of it, OP's compressor (if he isn't using a manual underpinner) would only run for a couple of minutes a day. It's such a low level of business activity it's not worth worrying about!

I'm not suggesting that he should hide his business from the council; more that he has no need to report anything to them. If he's paying business rates than he'll have a planning issue.

[Roboframer]

You could get more noise from a DIY or car enthusiast.

I started from home and wrote to the council to inform them of my intentions, stating that no building would be changed, little-to-no noise made and no customers calling (I was 100% collection/delivery) They wrote back saying no planning permission was necessary but it would not be a go-er with customers calling in a quiet cul-de-sac - IOW they wouldn't grant planning permission if it came to it anyway.

[oskar516]

Hi,

Just a quick message incase youre still looking for equipment, i'm closing down my framers in Hove and have pretty much everything you may need for sale, if youre interested send me a personnal message and i'll let you know what I have.

Thanks

Oskar

[Roboframer]

Or better still, you send the thread-starter a PM or start a topic in adverts/sales/wants

[IFGL]

Oscar op said he is setting up at HOME not HOVE, what are you like.

[J T Framing]

Hi
Thanks for the offer Oscar but I think that we have all we need for the moment.
Julia