Running a business from home is simply cheaper than other options. If you lease office space somewhere, you have commercial rent to pay, plus utilities, plus a cleaning service, plus certain types of insurance that are often required. In addition, you have to buy or lease office furniture that could include everything from your desk and credenza to filing cabinets and reception furniture. You’ll have to pay for a business phone line, a cable or DSL service for your computer, and perhaps outfit a kitchen or break room. You may have to pay for a reserved parking place and possibly some signage. The expense column is long when you rent your office space.
Even if you decide to purchase a franchise, where some costs are divided and shared by other franchisees, there is still a sizable – sometimes breath-taking — startup cost. And in addition to all the above expenses, you will also have to pay a monthly franchise fee and a certain percentage on revenues.
When you run your business from your home, you are capitalizing on the set expenses you have in place. You’re already paying a mortgage or rent payment, plus all your various utilities, property taxes, and insurance. So when your business is at home, you not only don’t have to pay any of those expenses again for your leased office, but you get to deduct a percentage of your home’s operating and depreciation expenses as a business expense. So it’s a double savings!
In addition, there are other forms of savings. You’re not driving to an office every day, so you’re saving on gas and car expenses. You save on eating out expenses because you don’t have to go out to lunch every day – it’s already in your refrigerator. You don’t have to pay parking expenses. You may even save on wardrobe costs, since there may be many days when no one sees you but the dog, so you don’t have to “dress up” every day like you do when you’re going to be out in public.
That’s not to say there aren’t expenses to a home office, of course. Regardless of location, you’re going to need a computer (desktop or laptop) – with internet access — and a printer, and probably some other technology like a copier and scanner. While the kitchen table may be your initial point of operation, you will eventually need a desk and filing cabinets. In fact, you’ll want to set up a dedicated room in your home for your office – it’s harder to prove to Uncle Sam that you do have a bona fide business at home if you don’t. You will certainly need a phone, although there are some more cost effective “bundling” options at home than at a business.
So while there are costs associated with a home business, those costs must be incurred regardless of your location. Why not have them be your exclusive costs, instead of all the other expenses you’d have to rack up in a leased office situation? And here’s another thing to think about. There are lots of consignment shops, “craigslist” offerings, and deals at Habitat’s Restore and other nonprofit retail operations where you can buy a lot of your office needs on the cheap.
There are just so many forms of lower costs when you work from home. And lower costs mean lower risk, which gives you increased opportunity for success.
