Many small businesses fall under the category of home-based business. For example, tradespeople can work from home and register their business as home-based. Then, the place of business can be located in the business owner’s own home, such as with hairdressers, beauticians and similar professions. Consultants and contractors can also operate from home and register as home-based business owners. And lastly, most online businesses are also home-based.
If you are planning to start a home-based business in Melbourne, there are several steps to take and certain procedures to follow. Just like when starting any other business, you should think about registration, licences, insurance, tax and contact with clients.
Registering a home-based business
A home-based business needs to be registered just like any other type of business. When starting a business, submit a registration application to your local council. You can also ask them about any information about the registration process, because it may slightly differ from one type of business to another. When you register, the local council will issue the necessary licences for your business, and they will help you in case you need additional licences from other local or state authorities.
It is important to purchase an appropriate insurance policy for a home-based business. There is a common misconception about the business of this type. Many business owners believe that their business is covered by a domestic Home and Contents insurance policy if they work from home. However, this is not the case, so make sure to insure your business in addition to your home insurance.
Tax deductions and costs
Home-based businesses fall under two types of deductible expenses – running and occupancy expenses. Running expenses include electricity, phone, cleaning and printer consumables. Occupancy expenses include mortgage interest, rent, council rates and insurance premiums. Both these types of expenses are normally associated with running your home. In case you do not have a specific working area, you can claim tax deductions for both categories. However, if there is a separate working area in your home, then you are only allowed to claim running expenses. Also, you may be required to pay capital gains tax if you use a part of the home for business. This can happen even if you did not claim any occupancy costs when you started the business. Therefore, before you start, make sure to check all the details on the website of Australian Taxation Office.
Contact with clients
Every business needs to establish contact with their clients, and so does the home-based business. If you use a landline phone, it is wise to have a separate phone line for business from the one you have for personal use. This will not only keep your privacy, but you will also not be disturbed out of the working hours. Also, you should activate an answering machine for the business line. When it comes to the physical address of the business, if you want to avoid using your home address, you can use a post office box which can easily be set up with Australia Post. Lastly, online communication is also inevitable nowadays, so make sure to make a working website and an email address for the business.