Locating your Business at Home

If you are starting out, it may be possible for you to operate your business from home until you become more established, especially if you provide a service.

You need to consider what facilities you require for your home office, which will depend on whether you operate your business from home or at home.

From home

Businesses operated from home do most of the work away from the home office at the client's premises. For example, plumbers, electricians, consultants, or bookkeepers usually travel off site to deliver services.

At home

Businesses operated at home do most of the work at the home office which may include seeing clients and accommodating employees. Examples include computer programmers, alternative health professionals and freelance writers.

Locating your business at home

Advantages

  • Save commuting time and money on fares or petrol.
  • Control over your work space and hours.
  • Low start-up costs, overheads and low financial risk.
  • Provides the opportunity to build your business slowly.
  • A portion of the rent and operating expenses may be tax deductible.

Disadvantages

  • Business activity may conflict with home life.
  • Space at home used for business operations is generally not purpose built.
  • Clients might visit at odd hours.
  • Distractions during working hours from family and friends dropping in.
  • Capital gains tax may apply when the house is sold.
  • Issues with parking or noise may irritate neighbours.

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Do I need a council permit?

Most small businesses operating from home will need a Home Occupation Permit/Approval.

As a general rule, local councils will approve home-based businesses where only a minimum level of business activity occurs on the premises. However, you must check your local council's requirements.

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Physical attributes

Assess whether your home is a suitable place for operating your business by considering the following questions:

  • Do you have a separate room where you won't be affected by noise or distractions?
  • Are your business activities likely to disturb the neighbours, create excessive noise, generate offensive rubbish or create demand for parking by multiple clients?

Ideally, you would have a separate room or building for your home-based business. Spare rooms, large sheds, garages, or studios can make ideal business workspaces. A separate work space with its own equipment, furniture, and stationery allows you to switch between home and business activities more easily.

Consider installing a second phone line that will allow you to control calls, manage your time, and separate the costs for private and business use.

If you have employees who will be working at your home-based business premises, consider what equipment and furnishings they will require. Is there adequate parking or areas for employees to take breaks and eat meals?

A home-based business is effectively a workplace, so you must also identify and manage workplace hazards to provide a safe work environment.

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Insurance

Generally, residential insurance policies or personal car insurance policies will not cover business activity, so you will need to buy extra business insurance.

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Tax deductions for your home business area

You may be able to claim deductions for the proportion of the expenses relating to the area of your home you use for business purposes.

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