Home office – why
Having a home office may be an attractive option if you’re running a small “one-man show” or starting out small with a view to expanding once the business is off the ground. There are, however, some practical issues to consider before you start setting up your office.
Home offices can be tricky so you need to have a plan of action. Where, what, why and how do you want to set up your work-space? Knowing what your needs are and having a strategy for the office set-up will help things run more smoothly over the short and long term.
What do you need?
Make a list of exactly what you need in order to establish and run your business. Your needs will depend on what type of business you are running The most important questions include (but not limited to):
- Do you have a desk big enough to do office work? Will you need two separate areas for different types of work or do you need a separate space where you can meet with clients?
- Is there enough privacy for you to work or make a call without distraction?
- Do you have enough storage space and equipment, such as a file cabinet, bookcase, credenza, etc.?
- What office supplies will you need?
- Where are the electrical sockets located? Will you need additional power sources?
- Will you need to buy a computer or will you need a software upgrade? Where will you store backup disks? Is the storage area safe from fire, flooding, etc.?
- Do you need a separate internet and business telephone lines?
- Do you have a smoke detector in your home office or a fire extinguisher nearby?
- Can you lock the door and windows? Will you need to upgrade your home’s security in order to protect the business’s property and assets?
- Do you need separate insurances for your office equipment and assets?
Where will your office be?
Now that you know exactly what your needs are, you’ll have a good idea of the best area in the house to set up shop. If you have children or other family members living at home, you’ll need to be away from distraction and have a space that is out of bounds for the rest of the household. A separate room is important and not only for this reason.
Aim to create an organised office area that meets your needs and allows you to be efficient and productive. You may have to get creative with space you have available, such as storing files in another room but keep supplies and files you use often close at hand.
Separate the professional from the personal
Be sure to keep your personal life from spilling over into your business life (and vice versa). Not only does this mean stopping the kids from playing in your office, but it goes a little further. Set up a business bank account to avoid mixing personal expenses with your business expenses.
To further reduce confusion, try to store personal cheques, records and even post in a room separate from your office. Fully segmenting these two parts of your life may also help at tax time.
Talking of Tax
When running a home office, a taxpayer is entitled to claim for using their home as an office. It is quite a simple calculation.
- Measure the room or space used. This has to be exclusively used for your office. EG: 25 square metres + 5 for the bathroom and kitchen = 30
- Get the total measurement in square metres. EG: 200 square metres
- Calculate the room area by the total area as a percentage. 30 of 200 as a percentage is 15%
You can claim 15% of the expenses of the house for business use.
These include but not limited to:
- Rent
- Utilities
- bathroom and kitchen supplies
Use formal processes in your home office
While you’ll be more relaxed than the average work environment, the formalities should remain the same. This includes everything from standardising record-keeping and paying invoices, to logging time with customers and mileage for business trips.
Keeping formal procedures in place for standard business functions will ensure your productivity is at the ‘normal’ level. This is essential. Formal processes help your clients know that you are professional. Make sure you start these from day one so you start fresh and do not have to try and implement these processes after you have developed some “bad habits”.
Organise your time
Flexibility is a key benefit of working from home. Yet, it still requires that you put in a fair amount of time. Setting a typical schedule for working in your office will help you stay focused while keeping standard office hours. Communicate these hours to clients and family members
Once your office hours are set, don’t forget to hang a clock where it is clearly visible. While this may seem obvious, the truth is that when working from home, it’s easy to forget about time. Even though your work is at home, the doors must be closed for the day and work ends at a specific time.
Having a home office may be easier than finding an office space to rent or buy, but as you can see, it still costs money, time and creativity to set up. Doing it strategically will help you set the tone to strike a balance for doing good business on your own terms.
This post was updated on the 18th February 2021