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One in six people in the UK are
operating as an ‘online business from home’, specifically purchasing goods to
resell, or making their own products to sell for profit, finds research.
Of these ‘home businesses’, 5.2
million (65 per cent) are buying items specifically to resell on at a profit,
while 2.8 million sell home-made products such as greeting cards, soaps and
eBooks, according to a study by Direct Line for Business (DL4B).
DL4B has termed these companies ‘home
webtailers’ – retail operations selling goods direct from home using the
internet.
The research also reveals that three
in four (74 per cent) home businesses keep all their stock at home with an
average value totalling £4,388.
Analysis of trades shows that a large
number of online sales operations run by private individuals are good-sized
businesses, with the top 5 per cent of private sellers generating an annual
turnover of a very healthy £18,094.
With the new personal income tax
threshold of £9,440 now in place as of the 6th April 20134, DL4B believes that
a significant number of people selling products online will be unaware that
their activities online mean they are actually running a
business from home.
Those operating a business from home
on top of other employment may need to pay tax on all turnover generated
through online sales.
Jazz Gakhal, head of Direct Line for
Business says that a large proportion of people clearly don’t view themselves
as running a business, despite generating a sizeable turnover selling goods
online to be dispatched from their home.
'People should check with HMRC if
there activities online mean they qualify as running a business. Stock stored
at a home will not be covered by a standard home insurance policy, so people
are putting themselves at financial risk.
'Indeed for those people transporting
goods to and from home, insurance is also
required to avoid damage in transit.'
The research also reveals that when
asked about how these online home businesses prioritise key actions when
they first began selling items, sorting tax arrangements and organising
insurance rank 6th and 8th.
The top priorities are buying more
stock, setting sales targets and devising a business plan.
