Running a part-time business from home
Setting up a business from home is often seen as a safe or convenient way to venture out into the business world, while still having the benefit of a regular income from full-time or part-time employment. If you’re worried about possible future redundancy, a successful part-time home business gives you peace of mind and something to fall back on. In addition, a home business can also provide a nice secondary income.
Your 5–9 job
The financial advantage
The great advantage of running a part-time business from home while you have a full-time day job is that you don’t have to stress about your finances. Your 5–9 business gives you the opportunity to test your idea with less risk, while having a steady income from your main job takes the pressure off during the 6 to 12 months, or longer, that it takes for a small business to start making money.
Don’t neglect your day job
While enthusiasm for your new venture is understandable, you need to take care not to neglect your full-time job. In addition, you may have to spend your lunch time making business phone calls and answering emails. This could cause your employer concern as you’d not be 100% focused on your day job.
If you need to make business calls or send business emails while on breaks during your day job, it would pay to have a chat with your employer about this. In addition, make sure you use your own mobile phone or mobile Internet device for these purposes, and reassure your employer about your intentions to do so.
Finding a work–life balance
Working from home, being your own boss, and pursuing long-held dreams appeals to most of us, but doing two jobs can be challenging if you aren’t careful about maintaining a balance.
Working a day job and then coming home and working at night too is not going to leave you with much spare time for family, socialising, exercise and hobbies. You’ll need discipline to run your business, get the necessary work done each day, and to maintain a life outside of work.
Take advantage of the flexibility that working from home and being your own boss offers. You might work on Monday, Tuesday and Wednesday evenings but take Thursday and Friday evenings off. Or, you could work an hour in the morning before heading to your day job and then for only a couple of hours when you get home.
Working outside regular office hours
If you deal with suppliers and other companies as part of your business, you’ll need to consider how you’re going to communicate with them if your business’s working hours don’t overlap.
Thanks to the Internet, you can work part-time but still effectively be open for business 24/7. Customers all around New Zealand and overseas can view your products and services online, and email you their questions and orders. Don’t be a slave to your email by checking it constantly. Consistently replying to customers within 24 hours should be sufficient to keep most people happy.
Avoid a conflict of interests
While you have every right to pursue your own interests after hours and set up a business on your own time, you need to be careful not to create a conflict of interest and use your position at work for your own personal advantage. In most instances, your boss would not be happy if you operated an after-hours business that was similar, or in direct competition, to your day job. Your employment agreement might also prohibit you from entering into direct competition for a certain period.
If you suspect there might be a conflict of interest, it is best to be up-front about your intentions with your employer, to consider another type of business, or to resign and launch your business as a full-time operation.
Setting up at home
Running a part-time business from your home is a low-risk way to start your business. You don’t have to pay additional rent or take out a mortgage on business premises, but you’ll need to set up a suitable home office.
No matter what type of business you are in, it is vital to have the support of your family if you plan to work from home. They will need to understand that you must have quiet, undisturbed time when concentrating on work. They will also need to agree to customers coming to your home if this is necessary, and will need to help you maintain a home environment that is professional and welcoming.
Because you will generally only be available to work on your part-time business outside of normal working hours, you might need your family to assist with things that need to take place during normal working hours, like deliveries, posting, or taking messages and orders.
A supportive network of friends is also important. You might need them to help out at times, or just as sounding boards to bounce ideas around and get honest feedback from on the design of your website and brochures, or a business decision you’re considering.
Your home work space
You should look to set up a dedicated work space within your home. This will minimise the number of distractions and allow you to set up the tools of your trade, or stock if you’re selling products rather than offering a service.
Setting up a separate work space within your home also allows you to close the door on it when work is over for the day. If you work from your laptop at the kitchen table or in the lounge it can be hard to leave work behind and achieve the necessary work-life balance.
Will clients visit you at home?
If you are setting up a service business, like massage therapy or hairdressing, or a direct sales business where people will need to select or collect stock, your clients will need to visit you at home. You’ll need to consider how you feel about sharing your home with the public, and how you’ll maintain your privacy.
Can customers access your work space directly through an external door, or will they need to knock on the front door and walk through your living areas, where your family may be trying to relax, study, or perhaps bickering with each other? If possible, try to set up your business so that it has a separate entrance. If you have pets, bear in mind that some people are allergic to cat hair and others are frightened by large dogs.
Do you need a PO Box or separate business phone?
You might need a Post Office box for your business needs and image. Some of your customers may be put off by a residential address and consider it unprofessional to send mail to your home.
Think about whether you will need a separate phone line or mobile phone for your business. As cute as your 4-year-old may be, you might not want her answering the phone when customers call, and your family’s voicemail greeting may make customers think they have dialled the wrong number.
Having a dedicated work mobile phone would remove this problem and enable you to be contacted when away from your office. It also means you won’t answer your personal mobile phone while at a social event, only to unexpectedly end up talking business for the next 30 minutes.
Chances are that if you are running a part-time business from home, you are working by yourself. While this gives you freedom, it can also be isolating. It can also be difficult to find the information you need when you first start your business.
There are a number of regulatory and compliance issues you need to be aware of when starting your own business, even if it is part time. This ranges from tax obligations to business licences and consents. You’ll need to find out more about what is required from Inland Revenue, ACC and other government departments. The compliance section of the Business.govt.nz website is a good place to start.
Your tax obligations
You’ll need to complete a tax return for your home business. How you go about paying your tax depends on whether you are registered as self-employed or have registered your business as a company. A company is considered an individual in its own right and has to complete its own tax return.
If you are self-employed, any income you earn is your personal income. Therefore, at the end of the tax year, you add your personal income from your day job and your personal income from your part-time business together. In your tax return, you state your total earnings, what tax you owe on those earnings, and how much of that tax you have already paid on your earnings from your day job.
You can still claim expenses like a portion of your rent or rates, mortgage interest, and telephone and power bills, and claim depreciation on any business assets that have a lifespan of more than 12 months, such as your computer, desk, and printer.
You can also claim for business travel expenses and expenses related to using a vehicle for work. Visit the IR website for more information on claiming business expenses.
Where to get advice
While you can bounce business ideas off family and friends, you’ll also need to cultivate a network of business people and professionals to assist you. Get in contact with your local industry association or Chamber of Commerce and ask for advice, or simply attend their regular meetings to widen your circle of business contacts.
For ongoing support, consider contracting an accountant to go through your books or a lawyer to assist with any legal issues. If you have been in business for more than 12 months and have fewer than 25 employees, you can access the New Zealand Business Mentor Programme.
- Complete this checklist to see if you’re ready to start your business.
- Set up your work space and either arrange a separate phone line or purchase a work mobile phone.
- Find out about the different cost options for PO boxes.
- Create a website, brochures and business cards for your new business.
- Contact the IRD to register your business as a company or register as self-employed, and to request an information pack.
- Join your local Chamber of Commerce to access ongoing business support and advice and network with other business owners so that you don’t feel so isolated.
Content provided by The Small Business Company