New side business: Legal aspects clarification

[Milkyway]

Hello good people,

Looking for some thoughts please...

Aside the IT contracting business (I am a one man company), I have started a small web-based software product development activity as well (all by myself) which I sell through my re-seller via my own company website.

This additional activity is something I do from my spare time and weekends, and it has started to sell (this is a website theme package product)

Now I do this from home in my spare time, and all I need is my laptop, new ideas, and nothing else.
I also don’t need a separate office room / facilities in my home etc. since I can do it anywhere at home.

Now my questions are these:

1. Do I need to hire a serviced accommodation for this activity? Is it compulsory under any law?
I ask this since my rental agreement may not allow to do business activity based at home?

I don't have any customers visiting me at all. Its all an email based support model.

2. Also in my invoice to the re-seller (based in USA), I use the virtual office address at the top of the invoice, but my VAT registration is at my home address.
Would VAT people demand that I have a fixed office other than my home for this business activity?

There is no VAT aspect to these sales, since the USA re-seller is the one who owns collecting the VAT and other taxes and remitting to the appropriate governments.

My accountant says it’s up to me! That is all they say.

3. My accountant also says that if I don’t use an office but hire it just to ensure I keep my tenancy agreement happy, and still continue to do the software development at home in my leisure, the serviced office accommodation will not be allowed as expense since the business is not using that specifically to develop the software (since I will be developing at home at my leisure time mostly)

I don’t want to hire the office, and not use it and then not be able to claim it back.
Also I don’t need a physical office space to do this extra activity – since all I need is my sofa and my laptop and my leisure time.

Also, the accountant says that my landlord can have issues with their insurance, and also capital gains implications when they sell the house, etc. because I might have used it for business (home-based) even though it was on the leisure time.

I am kind-of overwhelmed with the number of implications it has just by starting a small side-business activity
Are laws this complicated? (even for such a small extra business activity)
At this rate, entrepreneurial skills will die soon.

I am bit confused what to do now. Throw in your thoughts please.
I am sure many here might be doing something on the side aside contracting, like me!

My sincere apologies for too many questions. First time here. Please forgive me if i have not articulated my questions well when asking here.

Thanks in advance.

[b0redom]

Sounds like utter tripe to me. If you're renting a house, rather than living in your own, I would suggest having your registered address with your accountant etc.

You're effectively working from home, not running a business per se.

[Milkyway]

Sounds like utter tripe to me. If you're renting a house, rather than living in your own, I would suggest having your registered address with your accountant etc.

You're effectively working from home, not running a business per se.

Hi Thanks.

I have my "registered office" already with my accountant's office address.
That is sorted.

This is about the "principal place of business" i.e. trading address.
But I live in a rented house.

Also, for safety, I have purchased a Virtual office address service, so i can use that address for my Invoice addressing purposes.

[WordIsBond]

Make some money, buy a house.

Seriously, what does the lease say? They want to be able to kick you out if you start having a bunch of people coming to your door and buying stuff from you.

Are you doing anything that anyone can see you are running a business? Or are you doing things at the house that you simply could be doing as a hobby and no one would know or care?

Does the lease forbid you from working from home?

Is there any reason you can't use the virtual address (the one you are using for invoicing) as your principal place of business?

Alternatively, can you rent a closet from your parents for five quid a month and go sit in it to open your bank statements, and use that as your principal place of business?

Does your landlord even know, or have to know, or have any way of knowing, about this business?

What happens if you get a contract that allows you to work from home for one or two days a week? Will that be a problem, too? If not, it's hard to see the problem here.

[Milkyway]

Make some money, buy a house.

Seriously, what does the lease say? They want to be able to kick you out if you start having a bunch of people coming to your door and buying stuff from you.

Are you doing anything that anyone can see you are running a business? Or are you doing things at the house that you simply could be doing as a hobby and no one would know or care?

Well, most of the day i am out of my home on consulting work (at client sites).
In the evening and weekends, i am at home.
I do my development work with my laptop, and upload my product to my server, from where it sells (via my re-seller).
There are no customers visiting me etc. No business activity as-is, its me doing my software in my laptop, that is all.
But this is commercial though, since the product does sell (online), although technically speaking, the buyers are not even my customers, since at the point of sale, the re-seller sells it to the ultimate buyers who become the re-seller's customers. This is how re-seller based sales (like when selling through Paddle.com, avangate, etc.) works.
In that sense, my customer is just the re-seller based in USA.

Does the lease forbid you from working from home?

It just says the tenant should not do business there. That is all.
But my sales to the re-seller is business though?? That is why i am bit concerned.

Is there any reason you can't use the virtual address (the one you are using for invoicing) as your principal place of business?

I cannot use the virtual office as "Principal place of business" since VAT or any other authorities won't consider that as "Principal place of business".

That said, I can hire a serviced office as an add-on to the virtual office service, but that is exactly what i don't want to do, since I don't want to go there to do this work - why travel when i can just sit at home in my free time and do it in my laptop, while i have my family around with me, rather than travel to an office spending most of the time in travelling, and to do only an hour of my work there in my laptop, with nobody around in the office room!!!
I just don't want to hire this just for the sake of it!

This is all crazy!
Its just a software product that I am writing and uploading to my web server, and selling it through a re-seller, and looks like i have to consider too many legislations, and legal implications.

Maybe i am too paranoid, but i want to do it per word in the law books.
My idea is why end up with unnecessary complication when it looks like the product is doing well in sales. So - thinking of getting all things sorted.

But my accountant says its all up to me!

[pr1]

i think you're getting worked up unnecessarily - the only thing really in your way is your landlord, but as others have said, if he can't tell the difference between you working on your laptop and browsing facebook on your laptop, he's not going to know anything

keep accountants address as your business address or buy a PO box PO Box® - Business Address Service | Royal Mail Group Ltd

[Willapp]

It just says the tenant should not do business there. That is all.
But my sales to the re-seller is business though?? That is why i am bit concerned.

I think the intention in the tenancy agreement is to stop you running a physical business from your rented accommodation - e.g. a hairdressers or some business where customers come to your premises - as this would have implications on their insurance for obvious reasons. What you're really doing is just working from home so I honestly wouldn't worry about it.

Even if technically it could be argued you really are running a business from there (which I doubt), nobody is going to know/complain since how would they find out when you don't have customers turning up there.

Use your accountant's address for any legal/official purposes and keep your living address private as there's no need for anyone to know it.

[Milkyway]

Thanks guys.

The one thing to note is that my VAT is already registered with my home address as the "Principal place of business" since the VAT office were not happy to accept any other address for that purpose.

I asked them if i hired a specific serviced office accommodation for my business purpose, would they accept it... and then said thy won't since most of my work is consulting business (so i visit my client sites for doing the work) and the side/software product business does not even have any VAT impact on it at all since its the re-seller in USA is the one who is responsible to collect and remit any VAT to the appropriate govt(s) that my end users (from EU) will pay.

So i had to give my home address for VAT registration purposes - which they accepted.
Would that be objected by my landlord? They wont get to know this though, but it is officially there on record with govt. that this is my Principal place of business?? (I am sure all IT contractors have done this at some time in their contracting life though - so possibly no worries?)

I am really getting paranoid - i can see it now!
Apologies for my status-quo and too many (possibly repeat) questions on this.
This is all so crazy.
No wonder many people don't want to work or be self-employed- since it involves millions of hassles.

Cheers for all your inputs, guys.

[northernladuk]

Bearing in mind the tenancy doesn't allow business to be run from the property I don't thing having it down as registered VAT address would go down well. I'd be very unhappy if this happened to any of my properties. I'm just not up to taking the risk of my address being on the hook if everything went wrong.

[Milkyway]

Bearing in mind the tenancy doesn't allow business to be run from the property I don't thing having it down as registered VAT address would go down well. I'd be very unhappy if this happened to any of my properties. I'm just not up to taking the risk of my address being on the hook if everything went wrong.

Oh dear! So its trouble then??

I did ask the VAT office to confirm if they would accept a serviced office accommodation that i can hire for my business, but they said they want to have my home address since my contract / consultancy is mostly based on working from client sites... so even if i hired an office space, they were not going to use that for registering - since they have this key phrase "deemed trading address" which is nothing but home address if you are doing IT contracting/consultancy.

What do i do in this case??

So, presumably we should not do any IT contracting untile we buy our own properties?
That can take sometime for me!

Anyway, what would you do to me, at the worst, if i was your tenant? and you came to know i am doing IT contracting, and have the address for VAT registration?

Worst case - evict? Any other serious consequences could follow too ?
Please advise.

Maybe i should stop contracting, close my business and go find a permi job??