Ahhhhhhh, the joys of being your own boss!
One of the best parts of running your own business is having the option to work from home…. or anywhere else for that matter. In fact, with a 13 x 9 inch “portable office,” it’s easy to work from just about anywhere you can hook up your computer.
Some things to consider as a “Work At Home Boss”:
Make sure to set aside space in your home for your office. Without dedicated office space (bedroom doesn’t count) you won’t be able to claim your office as an expense. (Details below.)
Here are some of the things you’ll need and may be able to write off on your tax return (check with your accountant).
- Cell phone
- Land-line or Internet-based phone service
- High-speed Internet access
- Desk and chair, ideally you want them to be “ergonomically correct”
- Filing cabinet
- Paper shredder
The above list is not exhaustive but it does give you an idea of some of the basics you’ll need to get started.
- Dropbox or other online (cloud) file storage service
- Website hosting service
- Email marketing service
- Online scheduler
Again, the sky is the limit here, but these will get you started.
You also want to have a record-keeping system, whether it’s online or hard copy (I suggest both).
If you can, hire a bookkeeper to keep track of money going in and money going out and eventually an accountant to make sure you’re taking advantage of the tax benefits available to you as a business owner.
There are home office tax write-offs that can save you a lot of money over time. I go into detail on this and other legal matters in my DIY Legal Toolkit, which I created for entrepreneurs who can’t afford to hire a lawyer. There’s so much you can do yourself, and I teach you all of that in the toolkit.
The sooner you get into the habit of keeping track of all your business expenses (even if you’re handing off all the paperwork to someone to do for you), the less stressed you will be when it comes to filing your tax return.
When it comes to keeping track of your home office expenses, be prepared to have the following information at tax prep time:
- The percentage of your home that you use for business (the IRS provides you with a mathematical calculation to determine what you’re allowed to deduct).
- Proof that you use part of your home exclusively and regularly (those are IRS words) for your business; you can’t claim a corner of your bedroom and call it an “office.”
- The amount of depreciation for the furnishings and equipment you have in your home office. (This is the part that makes me want to hug and kiss my bookkeeper and accountant because calculations make my head spin).