Working from home
Where you work often comes down to your situation and budget. Many small business owners operate their business from home, especially when they’re starting out.
For some people, starting a home-based business is a low-cost way to trial a business idea.
Pros and cons
Pros of working from home include:
- you can arrange your working day to suit you
- there's no commute
- you can wear what you like
- you can claim home office expenses on your taxes.
Cons of working from home include:
- it may be easy to get distracted by your home life
- it can be hard to log off at the end of the day
- not having co-workers can be lonely
- your workspace may spread into your living area.
Things to consider
If you want to set up a home business, consider talking to your local council about:
- zoning – whether you can operate your business in your area
- signage rules, if you’re going to be selling or providing a service from home
- food handling requirements, if you’re going to operate a food business
- getting the appropriate license to operate.
Insurance when you work from home
If you run your business from home, household insurance doesn’t automatically cover your workspace or assets. Most personal home and contents policies don’t provide cover for business use.
Personal and business policies:
- have different limits
- have different ways of settling your claim
- generally cover different types of property and events.
For example, your house insurance policy may cover temporary accommodation if you can’t live in your home after an event. But it won’t provide any cover if you’re unable to continue running your business – for that you’ll need business interruption insurance.
Most home and contents policies also exclude liability cover for anything involving your business, so you’ll need to think about what cover you need for those events.
Your personal contents policy may cover some items that you use for business, but this often isn’t enough. You may need a business policy to ensure your tools, equipment and stock (if you have any) are adequately protected.
Not disclosing you’re using part of your home for business purposes can lead to your policy being cancelled or claim declined.
Health and safety when you work from home
If you're running a business from home, it's your responsibility to look after your own health and safety.
If you run a business which has staff working from home – either your home or their own – you’re responsible for talking through and developing policies with them, on how they'll manage their health and safety when working at home.
A healthy and safe workplace involves:
- identifying and understanding what your work-related health and safety risks are, particularly those that have the potential to cause people serious injury or illness
- doing what’s reasonable, what’s practical, and what you’re able to do to eliminate or minimise those risks – this is called proportionate risk management.
Looking after your workers’ health and safety could include providing safe equipment for their work, giving them information to help set up their workstations ergonomically, or making sure they keep in touch with their boss and team in case of emergency.
To ensure you or your staff are safe when working alone:
- train staff in emergency procedures including what to do in natural disasters
- make sure staff carry appropriate supplies including suitable first aid equipment
- regularly contact each other to check in at specific times.
ACC and home-based businesses
ACC levies are based on the type of work you do and how much money you make, not where you work – so working at home will make no difference to the amount you pay in ACC levies.
If you're self-employed or a contractor and can't work because of an injury, you’re automatically covered by ACC’s CoverPlus.
Getting your own premises
Moving to your own premises means more freedom and can make you feel like your business has taken a step forward.
You can either buy or lease your own workspace – both offer different levels of stability and flexibility. In either case it’s a big financial decision, so get good advice and do the sums.
Pros and cons
Pros of getting your own premises include:
- it can feel like a proper business to you, your staff and your clients
- you can fit out your workspace how you want – for example with your branding
- you can control noise levels
- if you have staff, it’s easier to create a work culture in your own space.
Cons of getting your own premises include:
- leases for commercial spaces can be up to three years, meaning you have to really think ahead
- paying commercial rent is an extra financial pressure if your business goes through hard times
- unless you’re in a serviced office, you have to pay extra for things like cleaners or technology fit outs.
Serviced offices
Serviced offices share facilities (a reception area, cleaners, power and IT), but each workspace is private.
If you’re thinking of moving into your own premises but aren’t sure where your business might be in a couple of years, renting an area in a serviced office can be a good way to dip your toe in the water.
They offer shorter leases, and many allow you to increase and decrease the size of your area – so you can downsize or grow over time.
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