Q: I am considering setting up an online tack business — what insurance considerations are there, particularly involving the storage of goods at my home?
ONLINE commerce is a booming trade, but if you buy any goods with the view of re-selling them, you must first register as a business. Contact HM Revenue and Customs for advice on tax and national insurance matters.
You are right to investigate home insurance before you launch your business.
“Most insurance providers impose a contractual obligation on the insured person to notify any material change in circumstances,” says Stuart Farr of Laytons Solicitors. “Therefore, if you run a home-based business but leave your existing home and content insurance policies unchanged, the insurer may refuse to cover you in the event of future claims.”
The first port of call over insuring goods is to check the details of your existing policies.
“These will often cover only your personal possessions, and will not necessarily cover commercial items, which would form part of your business,” explains Stuart. “These goods attract different considerations because of the varying levels of risk, in terms of theft, damage and replacement value.”
Jeremy Lawton of Shearwater Insurance Services says it is important to be upfront with your household insurance company.
“It must be informed of your business plans, as this is a material fact relevant to the policy,” he explains. “Some household policies will cover business contents or stock, so check with your insurance provider. Should you wish to sell items at shows or events, you’ll need separate cover for this. You’ll also need to consider cover for goods in transit, as your vehicle may currently be insured for social, domestic and private use only.”
ASK your existing insurer about the storage and security of items — are they particularly hazardous, flammable or of high value?
Keep accurate accounts and records of your business. These should include sales and purchases, (including extras such as packaging materials), bank and credit card statements and information regarding online transactions, such as the date of sale and the reference details. Separate your business funds from your personal account to make book-keeping easier.
eBay has some useful tips on its website to help you trade successfully. These include registering a business eBay account and retaining records of eBay fees and transaction details, including bank transfers and payments by secure online payment facilities.
HM Revenue and Customs Tel: 08459 154515 www.hmrc.gov.uk
Laytons Solicitors Tel: 0161 8342100 www.laytons.com
Shearwater Insurance Services Ltd Tel: 08700 767666 www.shearwater-insurance.co.uk
This Q&A was first published in Horse & Hound (5 April, ’07)