Got a Home Business Plan? Here's What to Do Next

There are an estimated 2.9 million home-based businesses in the UK, contributing around £300 billion to the economy each year. It's not a niche path anymore, whether you're testing an idea alongside a job or building something you plan to grow properly.

The appeal is obvious: no commute, lower overheads, and control over your own hours. But running a business from home involves more than most people expect going in, and getting the basics right early makes everything after that considerably easier.

Key Takeaways

• Decide on a legal structure before trading. Sole trader and limited company work very differently, and it's worth getting this right from the start.
• Check what you're actually allowed to do at home: landlord permission if renting, possible planning permission if you own, and a quick check on your home insurance either way.
• A separate business bank account keeps your finances clean, and an accountant is worth bringing in early, particularly for VAT once you approach the £90,000 threshold.
• Your registered office and director's service address are both publicly visible if you form a limited company, so a registered office service is worth considering if privacy matters.
• Getting clear on who your customers actually are before spending on marketing saves a lot of wasted effort later.

Sole Trader or Limited Company?

This is the first decision that actually matters. As a sole trader, you register with HMRC, keep your own records, and file a Self Assessment return once a year. It's quick to set up, but you and the business are legally the same thing, so business debt is personal debt.

A limited company takes more setting up, with ongoing obligations like annual accounts and a Confirmation Statement, but it separates you legally from the business. Directors can also take a mix of salary and dividends rather than paying income tax on everything earned. Neither is automatically right, it depends on your risk tolerance, income, and growth plans, and an accountant who works with small businesses can usually tell you fairly quickly which way the numbers point.

If a limited company's the right fit, you can register online through Companies MadeSimple.

Check What You're Actually Allowed to Do at Home

If you own your home, planning permission isn't automatic, it depends on whether the business changes how the property looks and feels from outside. A freelancer working from a spare room is almost certainly fine; regular client visits, staff, or frequent deliveries are a different story. If you're in the grey area, a quick call to your local planning authority settles it.

If you rent, you need your landlord's permission, and it's worth checking your tenancy agreement first, then getting their approval in writing.

In council housing, you'll need written permission from your local authority or housing association before starting.

Worth knowing too: if you form a limited company, both your registered office and your director's service address are publicly visible on Companies House. A registered office address service keeps your home address off the public record while still meeting the legal requirement, easier to set up from the start than change later.

Sort Out Your Finances Early

Running business income through a personal account gets messy fast. A separate business account keeps things clean and makes tracking income, expenses, and tax considerably simpler.

Bring in an accountant early, even for a small business. There are legitimate home-business expenses easy to miss, a proportion of your broadband, phone, even heating if you work from a dedicated space. Keep an eye on the VAT threshold too, currently £90,000, though worth verifying on GOV.UK since it can change. Some businesses register voluntarily before hitting it, to reclaim VAT on purchases, depending on their customers and costs.

Insurance

Your home insurance almost certainly doesn't cover business activity or equipment, and this is one of those things that doesn't matter until it suddenly does. Check your current policy, then speak to your insurer about a business add-on or separate cover.

If clients visit your home, public liability insurance is worth having. If you offer advice or professional services, look at professional indemnity too. And the moment you take on an employee, employers' liability insurance becomes a legal requirement, not a nice-to-have.

Getting Customers

Before spending anything on marketing, get specific about who you're actually trying to reach, what problem they have, why they'd choose you, and where they spend their time. A basic website is worth having from day one, even a simple one, since people will often look you up before getting in touch.

Beyond that, it depends what you're selling. Visual or product-based businesses tend to do well on Instagram and TikTok, service and B2B businesses usually get more from LinkedIn, and if you're working locally, community groups and word of mouth are often underrated. Pick one or two channels that genuinely fit, and build from what's actually working rather than trying to be everywhere.

FAQs

Do I need to tell anyone I'm running a business from home?

It depends on your situation: your landlord if you rent, possibly your local council if you own, your home insurer, and either HMRC (sole trader) or Companies House (limited company) either way.

Do I need planning permission to run a business from home?

Not automatically. The test is whether the business changes the character of the property from the outside. Quiet work from a spare room generally doesn't need it; regular visitors or deliveries are more likely to.

Should I use my home address as my business address?

You can, but it becomes publicly visible on Companies House if you form a limited company. A registered office address service keeps it private while still meeting the legal requirement.

What's the difference between a sole trader and a limited company for a home business?

A sole trader is legally the same entity as you, so business debts are personal. A limited company is separate, protecting personal assets and often more tax-efficient as profit grows, in exchange for more compliance admin.

When do I need to register for VAT?

Once your taxable turnover exceeds the current threshold, £90,000, though it's worth checking GOV.UK for the latest figure since it can change.

What insurance do I need for a home business?

Check your home insurance covers business activity first, since most don't. Public liability if clients visit, professional indemnity if you advise, and employers' liability the moment you hire anyone.

This article is for general information only and does not constitute legal, tax, or financial advice. Rules and thresholds can change, so it's worth checking current guidance on GOV.UK and speaking to a qualified professional before making key decisions.