SETTING UP A HOME OFFICE
Select the Right Spot
The space you choose for your home office should be well lit and properly ventilated, with enough room for furniture, supplies, storage compartments and other items you use on a regular basis. Watch window placement for glare issues. Keep in mind your space needs to be used only for business purposes and make sure it’s an area that will not become over run with personal use.
Your home office should also be equipped with sufficient electrical outlets and connections for your telephone, fax and Internet access. Any costs incurred to add needed outlets and other setup needs are 100% tax deductible as direct repairs.
Determine what kind of furniture you’ll need, file cabinets, printer stands, desk & chair, and any other items needed to organize records, tools and supplies. Review inventory of what you already have and determine the size of your room. This will make it easier to find an ideal layout and the square footage will be needed for preparing your tax return.
Next determine the equipment you will use and the electrical and space needs for the equipment. You will use some equipment less frequently than others, so consider ways to place items so that they’re easy to use.
Keep It Organized
Once your space is set up, take pictures showing the space as your office and file away with your tax papers to offer as proof of your claim. If customers visit your home office, an organized work environment makes a positive first impression about you and the quality of your services. Even if you never have visitors, taking a few moments to straighten up at the end of the day gives you a head start on tomorrow’s tasks. It also helps you avoid wasted time trying to located that needed stapler or hole punch.
Home Office Deductions
The Internal Revenue Service will let you deduct expenses related to that part of your home that you use exclusively and regularly for business. To determine the percent of use for business you need to compare square footage of the office space versus total square footage of your home.
Expenses that you will be able to deduct a % of include:
- Mortgage interest and property taxes or rent
- Home or renters insurance
- Certain home repairs and maintenance items
- Utilities necessary to your business (Note: The first phone line into the home is not deductible.)