Can you run a business on home broadband – and should you?

With more enterprises operating from home rather than office spaces, should entrepreneurs be switching from a residential to business broadband tariff?

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Frustration with slow broadband connections became a way of life during the pandemic, where a combination of home schooling and home working stretched local networks to the max.

With fewer demands on home broadband lines now the children are back at school though – and multiple phone alternatives available – many of us are managing to run successful businesses using a home broadband connection.

There are many reasons to consider doing this. Home broadband connections are cheaper on average, while accounts are easier to open, switch and manage. On the other hand, those who opt for business broadband may get faster speeds, quicker customer service and could find it easier to keep work and personal expenses separate.

Keeping it simple

Most of us are familiar with the costs and service levels with a home broadband connection. These residential packages offer a variety of promised speeds, depending on the network where you live and the package you opt for.

They tend to be cheaper than business broadband connections. Alex Tofts, broadband expert at online switching site Broadband Genie, says that you’ll be looking at “at least a 20% increase for a business broadband deal vs a home broadband deal for contracts with similar speeds.”

On a day-to-day basis, then, chances are you won’t notice the difference in performance if you try to run your business off a home broadband connection, especially if it is small.

Tofts says that for small businesses with between one and ten employees, a home broadband contract can be adequate if you opt for the right one. “We’d recommend a minimum fibre entry-level deal (36Mb) for 1–2 employees. Budget an additional 10Mb for every other person,” he says.

Accountant Polly Arrowsmith agrees that for many entrepreneurs there is no reason to complicate the issue. “Whether you need business broadband comes down to whether your residential broadband is fit for business purposes or not. Unless you need to incur two separate broadband costs, why bother?” she asks.

Reasons to switch

While the price difference can’t be denied, there are those who sing the praises of having separate business broadband.

Lucy Boulter, a communication consultant who works from home, has had business broadband in her home-based business for 20 years. “It keeps business and domestic costs apart, but mostly it secures a faster and prioritised response time if there is a problem of outage. Both are useful benefits,” she says.

Enthusiastic users point to higher service level agreements for business broadband as a reason for choosing it. BT targets a 100% availability level for its business broadband and starts refunding clients after ten hours of downtime. As well as offering a hybrid connection that gives you 4G broadband backup.

Rival business broadband company Sky offers 4G backup to its broadband as standard, and you receive £25 credit if you lose connection.

Gabriella Goddard, who runs the education technology app Brainsparker, says that the reliability of BT Business Broadband allows her to operate professionally. “Because I run training sessions over Zoom, reliability is key and that’s why I also have their 4G hybrid connection if the broadband goes down,” she explains. “Once, when the broadband went down I didn’t even notice until BT Business sent me a text because the 4G kicked in automatically.”

Talking tax

Some business broadband users also find the accounting side of having business broadband easier to negotiate

Carol Deveney, business-to-business strategist, says that because her business broadband is entirely tax-deductible it keeps accounting simple, although she acknowledges that business broadband takes longer to set up because you must provide key business documents.

Accountant Polly Arrowsmith says that it is possible to expense a proportion of residential broadband as a cost of business as well. “You do the expense on a pro rata basis, so you may expense 50-75% of the cost to the business if you can reasonably justify this as business usage,” she explains. “You would not be able to expense the full cost as you gain private enjoyment from the broadband too,” she adds.

What’s right for you?

When deciding whether you need a business broadband connection, ask yourself the following questions.

  • Is my current broadband fast enough?

If your home broadband is currently struggling with what you’re trying to do, a business connection may be necessary

  • Do I need business extras?

A broadband expert at comparison site Uswitch says that business connections may offer other perks such as bespoke email addresses, VPN servers and firewalls to keep data secure, and reliability guarantees. Consider whether these would be useful to you.

  • Do I need a static IP address?

If you want to run servers or host files, a static IP address, which tells other servers exactly where a computer is located and connected to the internet, is vital, says Broadband Genie’s Alex Toft. It can also improve the video conferencing abilities of your connection and help you run remote working software if other of your employees work from their homes. Many business broadband providers offer this, but residential broadband usually only offers dynamic IP addresses that can change at any moment.

  • How do I want this taxed?

If you are happy to only offset a pro rata amount of your home broadband against tax then this may influence your decision – though of course if you have business broadband for your business you may also need residential broadband for your home use.

Once you’ve decided

Whether you feel a business or residential connection is right for you, shopping around and getting the right deal is still vital.

Just like with residential broadband, business broadband rates and service levels vary hugely. You can check sites such as Trustpilot or Which? for ratings on different broadband providers as well as research the speeds offered to see which will cope with your business demands.

If you decide to stick with residential broadband, that is no reason why your business should look less professional. You can still use bespoke email addresses provided by domain name providers, set up websites and use fast residential broadband connections.

Many residential broadband connections also offer security solutions and firewalls, and you should ensure these are installed and that you investigate extra security features such as proprietary anti-virus software if you are worried they will not be strong enough.

Remember to shop around when you reach the end of a business or home broadband contract, so that you always get the best deal.

Moving on

There is no one right answer to the question of whether you should run a business on a home broadband connection. As the answers above show, it is certainly possible, though depending on the nature of your business you may decide that the extra features offered by business broadband are worth the higher price. 

As your business grows, and the internet connections needed by your employees change, you may wish to revisit this decision, so it is certainly worth keeping it under review. 

Rosie Murray-West freelance business journalist
Rosie Murray-West

Rosie Murray-West is a freelance journalist covering all aspects of personal finance, as well as business, property and economics. A former correspondent, columnist and deputy editor at The Telegraph, she now writes regularly for publications including the Times, Sunday Times, Observer, Metro, Mail on Sunday, and Moneywise magazine.

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