Starting a business from home: Everything you need to know at the start

9th November 2026

Starting a business from home can be an affordable and flexible way to become your own boss.

According to the Government's 2025 Longitudinal Small Business Survey, 66% of businesses with no employees reported that their main work premises were at home. Among small and medium sized businesses with employees, around 31% had business premises in a residential setting. You could be one of them. But where do you start? 99p Company Formations explains everything you need to know when starting a business from home. 

What kinds of business can you start from home? 

Plenty of businesses can be started from home, such as:

• IT and technology services: IT consultancy, software development, website design, technical support and computer repairs.

• Creative services: Graphic design, photography, copywriting, illustration, video editing and digital marketing.

• Professional services: Accountancy, business consultancy, bookkeeping, administration and virtual assistance.

• Online retail: Selling handmade products, clothing, accessories or other goods through an online shop or marketplace.

• Education and tutoring: Private tuition, online teaching, language lessons and educational consultancy.

• Beauty and personal care: Hairdressing, nail services, makeup, skincare, subject to the relevant permissions and requirements.

• Food businesses: Baking, catering, and preparing food for sale.

• Childcare: Childminding and other childcare services, subject to registration and safeguarding requirements.

• Trades and property services: Gardening, plumbing, plastering, building, decorating and other trades where the work is carried out at customers' properties rather than from your home.

Can you start a business from home as a sole trader or limited company?

Yes. You can operate a home based business as either a sole trader or a limited company: 

Sole trader

Operating as a sole trader is generally the simplest way to start a business. You and your business are legally the same entity, meaning you personally own the business and are responsible for its debts and liabilities.

You will usually need to register for Self Assessment with HMRC and pay Income Tax and National Insurance on your taxable business profits.

Limited company

A limited company is a separate legal entity from its owners. This means the company has its own finances, assets and liabilities, and shareholders often benefit from limited liability. You'll need to register your company with Companies House and meet ongoing filing and tax obligations, including submitting annual accounts and dealing with Corporation Tax.

If you're considering incorporating your business, read our guide to how to set up a limited company.

Benefits of starting a business from home 

Running a business from home offers several advantages, particularly if you're starting out with a limited budget or want greater control over your working arrangements.

1. Lower running costs

One of the biggest benefits of starting a business from home is the potential to save money. Renting commercial premises can be expensive, particularly when you factor in deposits, utility bills, business rates, maintenance and other ongoing costs.

By working from home, you may be able to avoid many of these expenses altogether. You could use a spare bedroom, converted garage or dedicated workspace rather than paying for an office or commercial unit.

This can be particularly useful when you're starting a business with limited funds and want to keep your initial overheads as low as possible.

2. No daily commute

Working from home means you don't have to spend time travelling to and from a separate workplace. As well as saving money on fuel, public transport and parking, you will have the capacity to put more time back into your business.

Although you may still need to travel to meet clients or visit suppliers, removing a daily commute can make a noticeable difference to your routine.

3. Greater flexibility

Depending on the nature of your business, working from home can give you greater control over your schedule and working hours. For example, as a parent, you might choose to complete client work during school hours.

However, flexibility does not equate to working fewer hours. When you're responsible for running a business, you'll still need to manage deadlines and customer expectations as you would working for someone else. 

4. Potential tax advantages

Depending on your business structure and the way you use your home, you may be able to claim certain household expenses as business costs.

For example, you could potentially claim a proportion of your heating, electricity, broadband and other relevant costs. This can help reduce your taxable business profits, although the rules differ between sole traders and limited companies.

We'll explain the main tax considerations later in this guide.

5. Easier to start small and grow

Starting from home allows you to test your business idea without immediately committing to expensive premises.

You could begin by offering services to a small number of clients, selling products online or working on a freelance basis. As your customer base grows, you can reinvest profits into equipment, marketing, additional staff or dedicated business premises.

Potential challenges of starting a business from home 

Although working from home can be convenient, it isn't necessarily suitable for every business or every individual. Before getting started, consider these potential challenges:

Keeping work and personal life separate: 

When your home is also your workplace, it can be difficult to switch off. You may find yourself answering emails in the evening, working at weekends or allowing business responsibilities to take over your personal time. Creating a dedicated workspace and setting clear working hours can help maintain a healthier balance.

Distractions and interruptions: 

Family responsibilities, household tasks, pets and other distractions can make it difficult to concentrate. If your business involves meeting deadlines or handling confidential information, you'll need to create an environment where you can work effectively.

Limited space:

Some businesses require storage, specialist equipment or room for employees. You may eventually find that your home is no longer suitable for your business activities.

Appearing professional: 

Working from home does not mean your business needs to look unprofessional. However, you'll need to think about how you communicate with customers, manage enquiries and present your brand. 

Isolation: 

Running a business alone can sometimes feel isolating, particularly if you're used to working alongside other people. Networking events and coworking spaces can provide opportunities to meet other business owners and develop useful connections.

What do you need to start a business from home? 

The equipment and resources you'll need will depend on the type of business you're starting. However, there are several basics worth considering before you begin.

A suitable workspace

You don't necessarily need a separate office, but having a dedicated area where you can work comfortably can make a difference.

This might be a spare bedroom, a desk in your living room or a converted outbuilding. Consider whether you have enough room for your equipment, stock and paperwork, as well as a reliable internet connection and suitable lighting.

Equipment and technology

Depending on your business, you may need:

• A laptop or desktop computer

• A reliable internet connection

• A mobile phone or business telephone number

• A printer and other office equipment

• Specialist software or tools

• Equipment relevant to your trade or profession

• Secure storage for business documents and customer information

A business plan

A business plan can help you establish what you want to achieve and how you intend to make money.

It doesn't need to be a lengthy document, particularly if you're starting a small business from home. However, it is worth considering:

• What products or services will you offer?

• Who are your target customers?

• How will you attract customers?

• What will you charge?

• What are your expected start up and running costs?

• How much revenue do you need to generate?

• What are your plans for future growth?

A business address and contact details

If you're setting up a limited company, you'll need an appropriate registered office address and registered email address for Companies House. You may also want to establish a separate business email address, website and telephone number so customers can contact you easily.

Potential costs of starting a business from home

One of the attractions of starting a business from home is that you can often keep your initial costs relatively low. Unlike businesses that require retail premises, offices or commercial equipment, you may be able to operate using resources you already have.

Some potential start up costs include:

• Company Formation 

• Equipment 

• Software 

• Website and domain 

• Insurance

• Marketing 

• Materials 

• Accountant 

• Travel expenses 

Do you need a licence to start a business from home? 

Certain industries and activities are regulated, meaning you may need to register with a relevant authority, obtain permission or meet specific standards before you start trading.

The requirements depend on the nature of your business and the services you provide. For example:

Childminding and childcare

If you intend to provide childcare from your home in England, you will to:

• Register with Ofsted 

• Submit DBS checks for you and anyone else over 16 in the household

• Hold a pediatric healthcare certificate 

• Meet minimum floor space standards 

Food businesses

If you plan to prepare, cook, store or sell food from your home, you will need to register your food business with your local authority at least 28 days before you start trading. This applies even if you're operating on a small scale. Your local authority may also need to inspect your premises to check that you meet food hygiene and safety requirements.

Depending on your activities, you may need additional permissions or approvals. You can find further information in the Government's guide to starting a food business.

Beauty and personal care

If you're offering treatments such as tattooing, piercing, electrolysis or certain other beauty services, you may need a licence from your local council. Requirements vary depending on the treatment and location, so check with your local authority before offering services to customers.

If you're unsure whether your business requires a licence, contact your local council or the relevant industry regulator before you start operating.

What regulations do you need to consider when running a business from home?

When starting a business from home, you may need to get: 

Permission from your landlord or mortgage provider

If you rent your home, check your tenancy agreement before using the property for business purposes.

Some landlords restrict commercial activities, particularly where customers will visit, employees will work from the property or business equipment and stock will be stored there.

If you own your home with a mortgage, check the terms of your mortgage agreement. You may need permission from your mortgage provider, particularly if your business involves significant changes to how the property is used.

Planning permission

Planning permission may be required if your business activities change the overall use of your property. This could happen if you regularly receive customers, employ staff at home, make significant alterations or create additional traffic, noise or disruption.

For example, using a spare bedroom as an office is unlikely to raise the same planning considerations as converting a garage into a customer facing beauty salon. Contact your local planning authority before making changes or starting activities that could affect your neighbours.

Insurance

The insurance you need will depend on your activities. Speak to an insurer or broker to check that your cover is appropriate. Depending on your business, you may need:

• Public liability insurance: Covers certain claims if a member of the public is injured or their property is damaged because of your business activities.

• Professional indemnity insurance: Can cover claims relating to professional advice, services or mistakes.

• Employers' liability insurance: Required if you employ staff, subject to certain exemptions.

• Business equipment insurance: Protects business equipment against risks.

• Product liability insurance: Can cover certain claims arising from products you manufacture, supply or sell.

Health and safety

Health and safety is another important consideration, particularly if you employ staff, have customers visiting your property or carry out activities that involve equipment, chemicals or other potential hazards.

You should consider the risks associated with your workspace and take reasonable steps to manage them.

This may include:

• Keeping walkways and work areas clear

• Making sure electrical equipment is safe and properly maintained

• Providing suitable lighting and ventilation

• Storing tools, chemicals and hazardous materials securely

• Having appropriate fire safety arrangements

• Keeping first aid supplies accessible where necessary

• Managing risks to customers, visitors and employees

How to start a business from home 

Once you've decided what type of business you want to start, the next step is putting your plans into action.

Although the process will vary depending on your industry and business structure, the following steps provide a useful starting point:

1. Decide what business you want to start

Begin by identifying the product or service you want to offer. Think about your skills, experience and interests, as well as whether there is demand for what you intend to sell.

It can also help to research your competitors and identify what makes your business different.

2. Choose your business structure

Decide whether you want to operate as a sole trader or register a limited company.

A sole trader structure is generally simpler to establish, while a limited company provides a separate legal identity and limited liability for its shareholders, subject to the usual exceptions. Consider your tax responsibilities, personal liability and plans for growth before making your decision.

3. Choose a business name

Think about what you want to call your business and check whether the name is available. If you're setting up a limited company, your chosen name must meet Companies House requirements and cannot be the same as an existing registered company name.

 

You may also want to check whether a suitable website domain and social media usernames are available.

4. Register your business

If you're operating as a sole trader, you will need to register for Self Assessment with HMRC.

If you're forming a limited company, you must register with Companies House before operating as that company.

You will need to provide details such as your company name, registered office address, director information and shareholder details. If you would like help with the process, 99p Company Formations offers affordable company incorporation services to help you get started.

5. Check permissions, licences and insurance

Before trading, make sure you have any necessary permissions, registrations and licences in place. Check your tenancy or mortgage agreement, speak to your local council where appropriate and make sure your insurance covers the activities you intend to carry out.

If your business operates in a regulated industry, allow enough time to complete the relevant registration or approval process.

6. Open a business bank account

A limited company should keep its finances separate from the personal finances of its directors and shareholders. You should consider how you will record income and expenses, manage invoices and keep track of tax obligations.

7. Establish your online presence

Most businesses benefit from having a way for customers to find them online. This could include a website, social media profiles, an online shop or listings on relevant business directories.

Make sure your contact details are easy to find and that potential customers understand what you offer.

Can you claim tax relief? 

If you're self employed and work from home, you may be able to claim a proportion of certain household costs as allowable business expenses. These can include:

• Heating and electricity

• Council tax

• Mortgage interest or rent

• Water rates, where applicable

• Broadband and telephone costs

Will I need an accountant? 

You don’t need an accountant to start or run a business from home. However, professional accounting support can be useful, particularly as your business grows.

An accountant can help with:

• Preparing annual company accounts

• Calculating Corporation Tax

• Submitting Company Tax Returns

• Managing payroll and PAYE

• Advising on salary and dividend payments

• Identifying allowable business expenses

• Understanding VAT registration requirements

• Keeping your financial records organised

Registering independently may work perfectly for experienced directors who fully understand their obligations. But for new business owners, having guidance at the formation stage reduces uncertainty and helps avoid preventable errors. At 99p Company Formations, this is something we know all too well.

If you prefer a simplified, supported experience that removes the margin of error from your Companies House registrations, then you’re in the right place. We offer full registration services that help you begin trading without the administrative hassle.

Join over 5000 business owners who have successfully set up their business with our trusted formation service today.