The Benefits of a Home Office
Years ago in this Blog, we wrote about the benefits of a formal, commercial space for your business. The article focused on the professionalism it gave your brand. Fast forward several years, and we now focus on the many benefits of a home office.
Last year, we moved out of town and made the hard decision to leave our lovely and very cool space at a professional office building. It provided many years of impactful client meetings and chance meetings with other sole proprietors and small businesses. We decorated our space with joyful pieces and historic moments in our professional lives. Its privacy saw us safely through the Pandemic. But, like so many things in a long life, it had its time and that time ran out.
When we relocated late last year, we made the decision to not relocate the business to a professional office building. After more than 6 years of consulting, we had ended our popular IWON professional women’s networking group. Much of our time at the original office building was dedicated to that group and one on one meetings for this aspect of our business. However, as that came to its close, we reevaluated the economics of a commercial office lease. With our focus shifting to selling our book, which was created from these blogs, while continuing to provide business support to a family business, the need for outside space simply was not there. And, just like that, our home office was created.
The IRS permits 2 approaches to a home office. The simplified method applies a standard dollar amount to the square footage of your home office. The standard method applies a percentage by calculating how much space your home office occupies of your entire home. We chose the standard method. It allows for the inclusion of deductions such as home utilities, repairs, insurance, and more. Be sure to discuss setting up a home office with your accountant, they are essential in the appropriate percentage allocations of each deduction and any home office decisions.
To qualify for a home office under tax rules, your designated space must be fully allocated to your business. It cannot be a shared space for a family room or playpen or tv room.
We moved our spacious couch from our commercial office and some of our bookcases along with our 2 computers, 2 printers, and big screens. We repurposed a glorious table to hold the screens and laptops and have a very useful and simple desk space with great accessibility. The smaller closet in this room fit our tall file cabinet and now holds our files. The room encourages creativity for our writing, provides serenity for focus when working on spreadsheets for our largest client, and provides the privacy needed for video conference calls. All at no extra cost to us.
Lastly, not to state the obvious, but a great benefit of a home office is the lack of a commute. Our new location has much more volatile weather and is located in a well documented ‘snow zone’. Removing the uncertainties and danger of travel in inclement weather was certainly a driving force in our decision to create a home office.
The lifecycle of a business changes and evolves. If a home office scenario fits best for your business, make sure to review the requirements with your circle of trust accounting advisor. You absolutely need their input and guidance.
We are very happy with our new set-up and we even acquired an occasional office pet who makes unannounced visits, something our previous commercial lease prohibited!
Be well.
