How to Start a Home-Based Business in 2022
The new year is a time for new beginnings. If it’s always been your dream to start your own business, 2022 might be the year for you. The good news is that it’s never been easier to start a business, and every year thousands of people do it from the comfort of their own homes.
Whether you’ve always wanted to start a business or you’re looking for a way to escape offices, commutes and the nine-to-five grind, starting a home-based business is a great option. It might seem like a big decision, but the first half of 2021 saw nearly 80 companies created every hour in the UK. If all those people can do it, why can’t you?
Starting your own business comes with many risks and responsibilities, so it’s understandable if you’re not sure about going out on your own. But the great thing about starting a business from home is that you can start it as a side hustle while still employed and grow the business gradually. We’ve put together everything you need to know about starting a home-based business.
Step 1: Choose a Business Idea
Before you can do anything else, you’re going to need a business idea. If you’ve had entrepreneurial dreams for a while, you’ve probably got a few ideas knocking about already. If that’s the case, you still need to ensure it’s a viable business. You can do this by asking yourself the following questions:
- What problem does this business solve?
- Is there an established audience for this business?
- Is this something I’m passionate about?
If you haven’t got a business idea, you can work backwards from the questions above. Think about consumer problems that exist and how you could solve them. If you’re struggling, look at some of your favourite businesses and potential competitors and see what problems they solve.
Step 2: Find the Perfect Business Name
Once you’ve got your business idea, you’ll need to name it. This might feel like one of the most straightforward steps in the process, but it can take time to find the perfect name. Here are some tips for finding the right name for your business:
- Pick a name that’s easy to remember and spell
- Try to find a name that shows your customer precisely what your company does
- Research any names you think of to check they don’t already exist
It’s always worth making a list of potential names and mulling them over for a while before making a decision. It’s also good to ask friends and family for honest feedback on the business idea and name. They may spot an opportunity or flaw that you’ve missed in your research.
Step 3: Pick Your Legal Structure
With a solid business idea and name ready to go, you’ll need to decide on the legal structure of your business. Your business’s legal structure will determine how you register, pay tax and run your business. This decision can be a bit daunting for new entrepreneurs, but while it’s an important decision, it’s not set in stone, and you can change your legal structure later.
There are three main business structures to choose from:
- Sole trader
- Limited company
- Business partnership.
The majority of home-based business owners choose to start as a sole trader. Your business will not be a separate legal entity to yourself, meaning all profits are yours. While it’s common to start as a sole trader, there’s no reason you can’t choose to become a limited company straight away.
Step 4: Put Your Business Plan Together
Once you’ve decided on your business idea, name and structure, you’ll need to dive into the logistics of how your business will work. The best way to do this is to create a business plan. While a business plan is necessary if you’re planning to find investors, it’s also a handy document when you’re starting your business — if you do it right.
While you’ll have already done some research, creating a business plan is your opportunity to delve deeper into the following areas:
- A more detailed and precise definition of your business
- Marketing strategies
- Your products or services
- How you will operate your business
- Finances and funding.
One of the easiest mistakes to make as a new business owner is to create a business plan and then ignore it. Your business plan should map out your road to success, and you should always have it handy. It’s also a good idea to regularly review and update it to avoid becoming irrelevant.
Step 5: Register Your Business
Now that you’ve got your business plan together and you’re raring to start your home-based business, the last step is to register your business. The process of registering a business in the UK is relatively straightforward. Registration varies slightly depending on your business structure.
If you decide to become a sole trader, you only need to register your business with HM Revenue and Customs. It’s quick and easy to register; you just need to provide:
- Your full name
- National insurance number
- Date of birth
- Business name
- Email address
- Contact number
- Company type
- Start date.
The process for registering a limited company is slightly more complicated but still relatively easy. Alongside registering for self-assessment tax through HMRC, you’ll need to register your business with Companies House. To register as a limited company, you’ll need to supply the following information:
- Business name
- Company address — you can use your home address or a virtual business address
- Director and shareholder information
- Documents of formation.
Once HMRC and Companies House have received your registration and confirmed, you’re good to go. You can get your business off the ground and start making your entrepreneurial dreams come true.