Running your business from home print Print

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Increasingly people are choosing to work from home or start a home-based business. This guide explores the benefits and drawbacks of working from home and looks at ways of making your home office experience more productive and enjoyable.

Making the choice

Twenty years ago working from home was a rarity. Now it would be hard to find a suburban street anywhere that does not house a home-based business, and the movement towards home-based work looks set to continue. Technology has vastly helped the process: with computers, scanners, cellphones and the Internet it's easy to be accessible and connected, and difficult or impossible for customers or clients to know where you're operating from. In many businesses your actual location no longer matters.


Suitable and unsuitable businesses

Suitable business types

Many types of business can operate from home. For example:

  • Service and consultancy type businesses such as freelance writers, bookkeepers, financial advisors, marketing consultants, beauty consultants and home cleaning businesses, or gardening services.
  • Technology type businesses such as web site builders, IT consultants, software developers, etc.
  • Businesses that exploit e-business potential and the Internet, such as direct marketing businesses that sell mainly through websites or mail order and don't need retail premises.
  • Small scale or 'close to hobby' home industry type businesses, such as caterers, doll or dressmakers, biscuit or jam makers.
  • Part-time businesses.

As this list demonstrates, a home office offers a low-cost way of trialling your business concept. Many of these businesses (such as a catering business started from a home kitchen) will have to move into commercial premises if the business grows.

Unsuitable business types

Some businesses can't be run from home. If you're interested in starting a home-based business, always check first with your local council or regional authority to find out what they permit in a home office situation. Also check your lease if you're renting. There might be restrictions you were not aware of. For example:

  • Many councils restrict the number of employees, some stipulating that only family members or people living in the house may work in the home business. This rule is probably quite widely broken, but the intent is clear: local authorities don't want houses taken over by a business or residential areas transformed by stealth into commercial areas. Nor would neighbours necessarily put up with employees' cars clogging the streets and creating extra noise.
  • Noise creating businesses such as panel beaters or sheet metal workers are not suitable. Most local councils or regional authorities have restrictions on trades or light industries operating from residential areas. There are good reasons for this beyond the obvious excessive noise factor. For example, trade type businesses operating from houses can lower property values in the area. It is no longer truly residential.
  • Retail businesses or businesses that attract a lot of customers are generally prohibited. Neighbours will surely object if there is a constant stream of cars to a certain house in a street.
  • Businesses that need to store dangerous goods or chemicals.
  • Businesses that need to project an upmarket, professional image or enhance their market credibility, or have regular meetings with clients or customers. It's fading, but there is still the perception out there that home offices are not quite professional. Very few home offices fall into the really impressive category. It's hard to project a professional image if there are children running around or shouting in the background while you're on the phone. If image and credibility are important and you do get customers or clients visiting you, it may pay you to rent an office in a serviced suite of offices, where you get a reception desk and waiting area, use of a meeting room, plus other shared business equipment such as datashow projectors that are not cost-effective investments for the average home office.


Benefits and drawbacks of working from home


  • No commuting and lower transport costs. As one home office person comments: "My cars last much longer now. I do only about 5,000 km a year, compared to 12,000 km formerly and the car spends a lot of its time in the garage, protected from the sun and weather."
  • Instant access to your office. No worries about leaving something at work.
  • Cheaper costs, particularly rent. Office rent can be a significant expense for most start-up businesses. Depending on the area you live in and the level of service and size of office you would require, the saving might be anything from $7,000 to $15,000 a year or more.
  • You can share some of the costs of running your home, such as telephone, rates and electricity expenses.
  • You can wear what you like in your own office and save on business clothing.
  • Many home offices offer more tranquil work environments than industrial or commercial areas.
  • You save commuting time and the stress involved. In the larger cities, both time wasted and stress can be significant burdens.
  • Technology is making it ever easier for you to operate from home. Technology permits ever more mobility - office in a car.
  • You can choose your own hours. For instance, some people prefer working late at night, when the rest of the house is asleep.


  • Your office is always with you. The advantage of being close to your children can be offset by the disadvantage of the interruptions.
  • The office space might be inadequate. Poor fit-outs and space problems characterise many home offices. Not everyone can dedicate a room to business or have a separate entrance.
  • It can be difficult to maintain focus, motivation and disciplined work routines.

Change of mindset

Some people continue to thrive in home businesses, others do eventually need to get out of a home office to change their mindset and convince themselves that they own a 'real' business. Many people experience a rise in the level of professionalism they personally feel and hence are able to project to the market when they move into conventional offices.

The move can spark a real growth phase for the business. It all depends, of course on you and your attitude.


Pitfalls of the home office and solutions

Feeling isolated

The main challenge facing most home-based small business people is the feeling of being isolated from the mainstream of business life, resulting in lower motivation and a loss of work discipline. The transition is most difficult perhaps for people who have moved from busy offices. The ANZ Biz Hub article, Eleven ways to combat the isolation of being in a small business will help you here.

Interruptions by family

It's hard to stop children interrupting you at work, especially if your home office also doubles as the lounge. "Once my children were old enough to understand," comments one home business person, "I explained to them that Mummy does need to be left alone at certain times so that she can earn the food that they eat and all the other nice things that they want. I'm also careful to structure in some payoff, so that they know if they're quiet for a certain period, there will be a reward, such as me joining them in a game for 20 minutes."

Interruptions by friends

This can be a problem, especially when you first start working from home and friends imagine they can pop in for tea or coffee. Making your office hours clear to your friends and treating them somewhat more formally during office hours will help.

A great role model

The consolation of being interrupted by your children is that you are a great role model to them. They are growing up witnessing you as a self-reliant, self-employed business person, growing and developing a business that feeds the family. What better preparation could there be for their own future as possible entrepreneurs? Many parents successfully draw their children into the business as they get older, letting them share business tasks of increasing responsibility.


Make sure you keep your neighbours informed of what you're doing and maintain good relations with them.

Is there a tax advantage?

There is a widespread myth that home offices offer significant tax advantages. In fact there is no difference in principle between deductions available to home office businesses and those available to businesses in conventional offices. In general terms, you can deduct all expenses directly related to generating your business income. The only real difference with a home office is that you have to work out how much of the home is used as an office (or how often it is used as an office). A common way to do this is to work out the size of your office as a percentage of your house. For example, if the office occupies 10% of the floor space of the home, then you would generally be able to deduct 10% of the rates bill (if you own the house) as a business expense. In the case of electricity costs (keeping the office warm in winter and cool in summer) you might feel that the office consumes more than 10% of your home electricity bill (particularly if significantly higher home power bills prove this). In this case you can get advice from your accountant about what might be an acceptable deduction (say 30%).

Insurance tip

Speak to your insurance broker or agent about possible insurance changes or extra cover on office equipment used at home. Home contents type insurance policies often don't cover equipment used for business purposes. Read the ANZ Biz Hub article Your business insurance needs for further information.

Your accountant will be able to give you more detailed advice about how and what you can deduct as legitimate home office expenses. You can review the Inland Revenue article Using your home for a business and our article, Tax made simple will also help you here.


Conclusion: reward yourself!

Succeeding in a home office does take some extra discipline and adaptation. Remember you're part of a good tradition. Successful multinational corporations have been started in suburban garages: Apple Computers and Hewlett-Packard are just two examples. If your business grows you too will probably have to move someday. In the meantime, enjoy the benefits of working in a home office and remember to reward yourself regularly for your achievements.



You'll find lots of useful articles for home business owners at


Further information:

To talk to an ANZ Business Specialist:
Call 0800 269 249
Visit your nearest ANZ branch


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