Buying a home and running your business from there? What you need to know

Source: Supplied. Bradd Bendall, BetterBond’s head of sales.

The pandemic of 2020 showed us that working from home is not only possible, it can also be a cost-effective and convenient way of doing business, says Bendall.

Discovery Insure estimates that it is possible for those who usually drive to work to save up to R2,900 each month on travel costs alone by working from home, says Bendall.

“While using your home as an office does have its own associated expenses, it will certainly save on commuting costs. There is also the additional bonus of an improved life-work balance. With less time spent on getting to and from work, there are more opportunities to enjoy quality time with family or pursuing hobbies.”

However, whether you plan to adapt your current home to accommodate an office or you plan on buying a new property that will allow you to start a new business venture from home, you need to bear the following considerations in mind, says Bendall:

• Be legally compliant: All properties are subject to zoning regulations, which determines the way in which they may be used. These regulations can vary between municipalities so always consult with your local authority before starting a business from home, advises Bendall.

  No permissions or departures are required for a home office or small business, such as a bed and breakfast of up to six guests or a small childcare facility.

  A property zoned as single residential allows for these additional uses. This would typically apply to a part-time business, or a single practice of an accountant or medical practitioner.

  Many town-planning schemes allow for a profession or occupation from a residential dwelling operating as a home enterprise. This means that the owner of the business lives on the property and the home must be predominantly used for residential purposes, says Bendall.

  However, if you would like to run a retail business or industry from home, or you need to make structural changes to the property, you will need to apply for planning permissions or departures from the municipality.

  “Visit your local district planning office to find out about your property’s zoning and what you need to do to comply with the applicable legislation to run your business legally,” says Bendall.

  Also, if your home is within a residential estate or complex, you will need permission from the Homeowners’ Association. Some businesses, such as car washes, heavy mechanical repairs, retail outlets and shebeens, are not allowed to operate in residential areas, adds Bendall.

• Make space for your business: If you are looking for a home that will allow for a business on the property, make sure there will be enough space to accommodate an office, consulting room or treatment area if you are running a spa.

  While a freelancer may be able to get by with a desk and a laptop, some enterprises will require a dedicated or modified space within the home. “Bear in mind that any structural changes may require council approvals,” says Bendall. Having a business in your home may require additional storage, so consider this too when buying or renovating. It may even involve installing a safe for confidential items or documents.

• Allow for parking: When looking for a home that can double as a business premises, make sure there is easy access and sufficient parking.

  Running a business in a residential area means you must take your neighbours into account. Make sure your clients can visit without impeding their driveways and parking spaces. Be mindful of additional traffic your business may bring to the street. Also, consult with neighbours if your business may generate noise.

• Catch a (tax) break: The South African Revenue Service states that anyone working from home with a room set aside to be “occupied for the purpose of “trade”, may be allowed to deduct certain expenses” that arise from running a home office.

  Refer to the Sars website for the criteria for claiming work-from-home expenses. Using a part of your home as a home office may have Capital Gains Tax implications when you sell. The capital gain or loss will be apportioned by considering the floor area of your home that was used for office purposes and the duration it was used. “Also, note that it is no longer possible to claim interest on your bond,” says Bendall.

  Changes to the regulations in 2022 mean that if you work from home and meet the requirements to claim home-office expenses, you are no longer allowed to claim interest on your bond.

• Stay connected: Connectivity is important when running a business from home, so make sure you have the necessary services in place. This includes fibre internet and a stable power supply.
• Optimise utilities: Working from home means that you need to optimise your utility usage. More time in your home means increased electricity and water usage. Installing a solar solution is a long-term investment that will reduce your electricity bill and minimise the risk of disruptions during load shedding.

  Behavioural changes can also make a difference, says Bendall. “Simple actions, like powering off laptops and appliances at the end of the working day will help reduce unnecessary power consumption.”

• Get proper cover: Items you purchased yourself for use at your home office need to be insured as part of your home-insurance policy but listed as “used for business purposes”. Business insurance is an umbrella term for various types of cover including general liability insurance, workers’ compensation and even cyber-liability insurance.
  Consult with your insurer if you set up a home business to ensure the appropriate cover for your needs. Find out whether you qualify for a lower vehicle insurance premium if you work from home and therefore no longer use your car to commute.

“Running a business from home can be rewarding – financially and personally. Just make sure that all the legal requirements are in place and that your home can comfortably and safely accommodate your business’s needs,” concludes Bendall.