Setting up your business to work from home

Due to COVID-19, there are now more people than ever working and running their businesses from home. Whilst initially this may have been the only option due to COVID restrictions, many people are now realising the benefits and opting for a home office instead of the daily commute to and from work. For those that are ready to venture out on their own, pursue their business dreams and have more flexibility in their work life, working from home can be a great choice and even save you time and money—as long as you’re prepared and have things in place to set you up for success.

At Truesight Advisors, we can give you the right advice and ensure you’re following all necessary obligations when it comes to working from home. Read our tips below on how to get started, and the things to consider to be sure that working and running your business from home is a good match for you in the long run. 

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CREATE A BUSINESS PLAN & DECIDE YOUR STRUCTURE

If you’re starting a new business, it’s important to have a plan in place that you can refer back to and use as a guide. Some things to consider and include in your business plan are:-

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• your business goals
• the target market
• your point of difference
• your budget/financial forecast

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Deciding on a business structure is also crucial as this can impact your tax and reporting obligations, how you run your business, and even what steps you need to take to ensure you’re legally compliant. The three business structures to consider are:- 

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• Sole trader
• Partnership 
• Company

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We understand that choosing the right structure for your business can be a confusing task so we’re here to make certain that the process is a much simpler one for you. We can get your business set up on the best structure, so you know you’re on the right path from the get-go, and even assist you to reevaluate your structure if needed—as your business grows and develops. 

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For more detailed information on creating a business plan, check out our blog, ‘How to make a successful business plan’, or connect with a Truesight Advisor to get personalised, tailored advice. 

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REGISTER FOR AN ABN & BUSINESS NAME

An ABN is an eleven-digit number that’s unique to your business and is important to have for tax purposes, as well as when you’re invoicing or offering receipts to your clients. It’s also necessary to obtain an ABN if you plan on registering a business name, and for GST or PAYG withholding tax. 

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For those who are set up as a sole trader or partnership business structure, you can decide if you wish to trade under your own name or register a specific business name instead. If your business is on a company structure, it will be a requirement that you register a business name. When choosing a name for your business, it’s a good idea to do some research to ensure it’s not already being used by another business or operation. A great place to check also is ASIC Australia which allows you to conduct a search on all registered businesses and make sure your business name is available. 

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TAX OBLIGATIONS

Tax time can be a stressful time for any business owner, especially if you’re running your business from home. No matter what structure your business is on, you will need to have a tax file number (TFN) to establish that you’re paying the correct amount of tax and will not be hit with any penalties down the road. 

Some of the taxes you may need to consider in your business are GST, PAYG withholding and FBT.

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At Truesight we like to make the process as seamless and pain-free as possible and can assist you with the preparation and planning in the lead-up to the end of the financial year. We can also explain and guide you through the various taxes that may apply to your business, and help you manage your financial situation so you’re not paying unnecessary taxes.

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Check out our tax planning service and how we can make the end of year a breeze for you and your business.

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TAX DEDUCTIONS

When you’re a business owner and operating your business from home, there are various deductions you can claim as a part of your home-based business expenses. These include:-

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• Occupancy expenses – rent, mortgage interest, council rates, home insurance premiums, land taxes.
• Running expenses – electricity, gas, phone, water, cleaning, furniture, the decline in value of equipment.
• Motor vehicle expenses – if you’re travelling between your home and other locations for work purposes.

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For further information on deductions for your home business, reach out to one of our Truesight Advisors who will happily walk you through what you can and can’t claim, or check out the ATO website.

CREATE A SPACE

If you’ve made the choice to run your business from home, it’s a good idea to dedicate a specific place in your house to where you can operate your business. Whilst working from home can allow for more flexibility and balance in your life, it’s very easy to get distracted by other responsibilities in your day-to-day life. Having an area set up that’s just for your work—whether that be a room turned into a home office or a desk where you can manage the needs of your business—will enable you to remain focused with minimal interference.

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OBTAINING COUNCIL APPROVAL

Depending on where you live in Australia, some businesses may need to seek council approval to operate from home. This would be based on the nature of your business, and what the rules and regulations are with your local council with regard to certain criteria around running your business from home. Some things to take into consideration are:-

• That your business doesn’t impact neighbouring residents or cause any disruptions in terms of noise, parking, signage, waste etc.
• That you’re not displaying multiple signs promoting your home business.
• The type of business you’re running from home. If it involves things like childcare, accommodation or food preparation, there may be certain policies and requirements in place with your local council.

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If you’re unsure if your home business requires council approval, it’s best to contact them directly or visit their website for further clarification. 

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INSURANCE

If you’re considering setting up a home business, obtaining insurance can provide peace of mind and protect you and your business during uncertain times. Firstly, it’s a good idea to look at your home and contents insurance policy to be sure that your business and business assets are covered, and then you may need to consider workers compensation insurance if you have employees, or public liability insurance if you are running a specific type of business.

Speaking with a Truesight Advisor can help determine what type of insurance policy you need and what types of insurance are compulsory in Australia, depending on your type of business and what state or territory you are from.

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When it comes to setting yourself and your business up to work from home, it’s important to prepare, plan and ensure you understand all the regulations and obligations around running your own business from home. There are many benefits to working from home, and we’re here to support you so you reap the rewards with minimal stress and worry. Reach out to a Truesight Advisor today and we can discuss all of your working from home queries and concerns.

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