Home is where the heart (and business) is

By Jean Kruse / Guest Editorial

For productivity, convenience and downright comfort, nothing beats a home-based business. Here, most every day is “casual day,” and the only obstacle on your commute is dodging the cat or dog on your way upstairs.

Home-based businesses have been a boon to women entrepreneurs, particularly those with young children. You can tend to the kids while you tend to business, run errands without competing with the “going home” crowd and easily capitalize on late-night brainstorms.

But home offices have their drawbacks as well. You need a measure of self-discipline to stay focused on your work, deal with distractions and resist the temptation to put business aside in order to take care of chores or “play hooky.”

So before you trade your power suit and heels for sweats and flip-flops, put some planning into your home office strategy.

Select your site wisely. Choose a room or area that is well lit and ventilated, and has sufficient space for your work activities, files, storage, etc. Multiple electrical outlets are a must to support computers, telephones, desk lamps and other equipment. And while many people rely exclusively on smartphones or Internet-based long distance today, consider installing a landline for your office. You don’t want spotty voice quality or service disruptions to interfere with your customer conversations.

Set some boundaries. Nobody likes cubicles, but they still afford office workers a measure of privacy. You need to do the same thing with your home office. Take steps to keep pets and children from continually wandering in and out during the day. Younger kids are unlikely to play quietly while you work, so consider full- or half-day daycare, or at least when a major deadline looms.

Know the rules. If you plan on utilizing the home office deduction on your taxes, remember that the space must be used exclusively for business. It cannot double as a den or spare bedroom unless you claim only a percentage of the room for the deduction. (See my previous column on deductible expenses at http://bit.ly/homededuct for more information on how this is handled.)

Many localities also have restrictions on the types of home-based businesses allowed and the types of activities conducted. Those include having visits from clients or employees, and manufacturing and shipping/receiving activities. If the rules are too cumbersome, you may need to find space elsewhere for at least some of your work. Even if your activities are permissible, make sure they don’t create neighborhood traffic or parking issues.

Protect yourself. Not all homeowners’ insurance policies cover home office items, nor will they protect you from other risks, such as business interruption, liability claims from an employee or customer, etc. You may be able to obtain endorsements for the appropriate coverage, but business insurance tailored to your small business may prove more cost-effective.

Regardless of where your small business is located, you can always find more information by contacting SCORE, the nonprofit small business organization. You’ll find a wealth of information and resources, plus more than 13,000 face-to-face or virtual counselors who can offer insights and ideas for no charge at www.score.org.



Jean Kruse is a SCORE counselor and SCORE Iowa district president. She operated her own CPA firm for 13 years and in 1988, joined RSM McGladrey, a national firm, where she provided accounting and tax services to small businesses.