An entrepreneur and a home office are not totally synonymous, but where you find one, there is a good chance you will find the other. There are a myriad of benefits to working from home, including a more flexible schedule and a commute that may only take 20 feet with a pit stop at the coffee pot.
Other than the money saved on gas from cutting out long drives to and from a so-called “real” office, there is also another important financial incentive to a home office — a tax break.
Entrepreneurs and business owners need to understand what actually qualifies as a home office. Simply working at a kitchen counter or camping out on the sofa (both of which might prove to be inefficient anyway) does not mean that you can write off these areas of your home as a home office.
Not only must you use a home office regularly (however, it is perfectly okay to take a laptop down to the coffee shop from time to time), but the area must be used exclusively as an office. Whether the office space is used to meet with prospective customers or as a primary place where business is conducted, there should not be any other activities going on in that area.
Working from home is definitely on the rise, and the trend has been well noted by the Census Bureau. The current estimate of home offices in America is approximately 26 million. However, in years past, just over 3 million people actually claimed home office related deductions on their taxes.
Whether a business is still in the startup phase or well on its way to success, every penny counts, and entrepreneurs who ignore tax breaks for which they qualify could be cutting themselves short when tax season finally rolls around.