What Cellphone






Thinking of working from home? Itís not as difficult as you think, but there are pitfalls and it pays to listen to the experts, as Rick Maybury explains



By the end of 1995 it has been estimated that as many as five million people could be earning their living, working from home. That figure includes both home-working employees of larger companies and the self-employed; according to the experts that that number could double within the next ten years. Working from home can seem like an attractive prospect, as some of those who has been forced into it by bad weather or industrial action may have found out. Apart from not having to waste time commuting it can be very productive, without the distractions and time constraints of normal office life, and there can be considerable financial savings for everyone involved. However, home-working on a permanent basis is a very different matter and requires a fair amount of planning to do it properly, or it can quickly turn into a nightmare.


The first thing to do is set aside a clearly defined workspace, preferably in a separate room; donít try and run a business from the kitchen table, unless you live alone and are used to working in a mess. A word or warning, creating a purpose-designed work-room within your home might sound like a good idea but it could result in the loss of some capital-gains tax relief, when you come to sell your property. To clarify this important but easily overlooked point, and the many others that will arise get, yourself an accountant, he or she could turn out to be your best friend in the years to come. A good accountant should save you far more in taxes than they cost you in fees, but choose carefully. Take heed of personal recommendations from other home-workers, at the very least make sure the ones you talk to are used to dealing with businesses of the size and type youíre involved with.  


One of your accountantís first job will be to show you how to set up a book-keeping system and advise you on opening the right kind of bank account. Book keeping for a small business neednít be difficult, properly organised, it shouldnít take more than an hour or so each week. There are plenty of simple to use computer-based accounts packages for small business users, though you really should keep records on paper as well, computers have been known to go wrong, catch fire or get stolen!


The accountant will also be there to steer you through the maze of trading formats, and help you decide whether or not you need to set up a registered company, operate as a sole trader or a partnership. Your accountant will act on your behalf for all dealings with the Inland Revenue, and this is where they really earn their keep. The tax system in this country can appear complicated to an outsider, you need someone who can make sense of it for you. The system can be made to work in your favour without breaking the rules -- you would be surprised how much of the cost of working from home can be offset against tax -- but it takes expert knowledge to know where the tax breaks are, which rules are flexible, and which ones should not be broken! Itís really not worth trying to do your own tax returns, unless youíre a trained accountant; the Inland Revenue know every trick in the book and you can be sure they cast a far more critical eye over DIY returns, than those submitted by accountants!


You will need to work out if you should register for VAT. VAT is not necessarily the bogeyman itís been made out to be. The paperwork is now quite simple and provided you keep accurate and up to date records, and pay your bills on time, it can work to your advantage. If youíre VAT registered youíll be able to reclaim the tax on office equipment, stationery and relevant supplies or services, an instant saving of 17.5 percent!


Insurance is something many home-workers overlook. Household contents insurance wonít normally cover theft or damage to office equipment owned by you, or your employer. Some insurance companies now offer extended cover for home-workers, though the limits can be quite restrictive,  and may be insufficient if you use an expensive computer and software, photo-copier, fax machine etc. the cost of replacement can quickly run to several thousand pounds. In such cases itís prudent to take out specialist policy; it neednít be expensive, premiums start at less than £200 or so for cover worth up to £8,000. You will almost certainly need separate insurance for portable office equipment, like mobile phones and laptop computers.


Many people are concerned that theyíre not organised enough to work from home, and will spend all day raiding the refrigerator, or watching TV. In fact home-working is entirely self-regulating, if you donít work, you donít get paid; bills and final demands are great motivators! Most people quickly develop a routine. Some find it hard break completely from office life and continue to put on a suit and tie each morning, before commuting to a back bedroom. Others change their working patterns to suit their lifestyle, and if that means getting up at midday, working in their pyjamas, taking Tuesdays and Wednesdays off and working at weekends until 3am, then so be it, itís your choice.


Doís and Doníts


* Create a well-defined workspace, try to keep your business separate from your home life


* Beware of Ďcabin-feverí, working from home can get very lonely, itís easy to become obsessed  and over-do it. Maintain personal contacts and try and get out as much as possible.


* Get an accountant, donít try and do your own tax returns


* Get advice on pensions and mortgage insurance. Home working can involve the loss of may important safety nets, if you become ill or run out of work


* Check with your local authority, Job Centre or training and enterprise council about the availability of grants, financial assistance and training schemes for small businesses, you might be lucky, but donít bank on it. Resources are tight, conditions are restrictive and the competition fierce...  



R. Maybury 1995 2303




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