With the advanced connectivity options available through the internet and associated devices and applications, more and more people are earning a living by working from home. Many of us, however, may be so ingrained in the notion of being employed and reporting to work at a fixed location that we may not be able to envision the benefits of self-employment in a home based endeavor.
Test Drive Your Business
One of the best things about a home-based business, is that it allows you try out your business concept before investing in office space, employees, and other overhead. These traditional business expenses can put a new business in the red very quickly.
Low initial income and high overhead can kill a business venture – that would otherwise be viable – before it has a chance to succeed. Another benefit of the test drive is that if you are transitioning from an employment situation to self-employment, again, you have the opportunity to see if the business is sustainable before quitting your job.
The flexibility of being self-employed is another huge benefit. Being able to set your own hours or deal with personal matters when it is best for you can relieve a lot of the stress of working while raising a family or meeting other personal obligations.
When you throw in the added advantage of working from home, flexibility is maximized in other ways, too. You can work at night if you so choose, or off and on throughout the day if that is what works best for you. This flexibility also allows you to be accessible to customers in other time zones.
Productivity can be enhanced or diminished in a home-based business. It takes self-discipline to work at home. Meeting the production requirements for successful business operation can be a challenge for some. For those with the necessary discipline, however, home-based self-employment can be a boon for productivity. The ability to work your business 24 hours a day if you wish, in and of itself, speaks well for productivity. When limited to a set of work hours in a traditional business setting, a lot of business can go unattended.
The Tax Benefit
Using your home as your primary business location carries a tax benefit. Federal income tax regulations allow a business income reduction for the cost of that portion of your house used for business purposes. A percentage your mortgage interest, property taxes, utilities and maintenance costs can offset business income. This deduction cannot result in a business loss, but unused amounts can be carried over to subsequent years. There are certain requirements that must be met for a home office deduction, so it is important to make sure your situation qualifies before claiming the deduction. See our newsletter next month for details.
This article is a service of Gratia P. Schoemakers, Creative Business Lawyer® One of our primary services is a LIFT Start-Up Session,™ in which we guide you through the right choice of business entity, location of business entity, start up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate.