For many entrepreneurs, a home-based business is a necessity as the costs are simply too high to rent a separate office or area. Many small business owners find that working out of a home office allows them to maximize their time to develop and grow the business. Similarly, those with families often find that a home-based business provides for more time with their family, ultimately reducing stress and resulting in a greater focus on the business. However, home-based businesses aren’t for everyone, although they are ideal for many.
What is a home-based business?
A home-based business is any business where the primary office is located in the owner’s home, regardless of whether the owner owns or rents the home.
Who can have a home-based business?
Home-based businesses aren’t just for startups and family businesses – they’re for everyone who earns money from their enterprise. Some examples of professionals ideally suited for a home-based business are photographers, freelance journalists, travel agents, real estate agents, graphic designers, and any other profession where you are the owner of the enterprise.
However, some municipalities and neighborhoods have restrictions against home-based businesses. Similarly, some leases prevent the leased residence from being used as a home office. Before jumping into a home-based business, contact our offices to schedule a consultation to determine whether your plans would violate relevant local law.
What are the benefits of having a home-based business?
As identified above, a home-based business can reduce stress and alleviate financial expenditure. By essentially eliminating your commute, you can free up extra time during the day for other activities. Many professionals face commute times over 30 minutes each way. By eliminating that commute, you can get back an hour each day to exercise, read, relax, and spend time with your family. Similarly, by merging your home and work, you’re able to reduce the amount you spend as you no longer have to pay for two separate locations.
However, one of the benefits of a home-based business that attracts many professionals is the tax advantages. By utilizing a home-based business, you can deduct a portion of your home’s expenses, such as mortgage interest, utilities, repairs and maintenance, and property taxes, against your business income. By utilizing this deduction, you can significantly reduce your taxable income which can result in thousands in tax savings.
What are the concerns with a home-based business?
While the benefits can be great, a home-based business isn’t for everyone. As identified above, a home-based business can cause issues depending on your local laws and any applicable leases. However, the issue that most struggle with is the isolation of always being at home, or the comingling of home life and work-life causing unexpected stress. Overall, the decision to combine your work and home shouldn’t just be financial – it should consider a holistic view of the impacts on your day-to-day life.
Business and Partnership Lawyers in Rhode Island, Massachusetts, and Connecticut
At Palumbo Law, we have advised and represented thousands of entrepreneurs and businesses in establishing their business, mitigating legal and commercial risks, and protecting their livelihood. If you have questions relating to a business in Rhode Island, Massachusetts, or Connecticut, please contact our office to set up a consultation or complete the contact form.