Determining how to set up a home office is one of the features of having a home business. In addition to the tax advantages, a home office improves your quality of life. Quality is improved by creating your own personal work space, a comfy space.
But first, if you are not currently backing up your computer files, it should be the first thing you do. For more information, please read my article, My Hard Drive Crashed.
Now that your computer is backed up, we can proceed.
How To Set Up Your Home Office To Increase Productivity
When you are working from home, it is important that your work environment or office is set up so that it suits you. You should be able to work at your best. To that end, I will discuss some of the different things you should think about when setting up your home office. Because you want to be most productive.
Home Office Factors
The following factors are important when setting up your home office.
- Equipment – The equipment you need for your business must be readily at hand. It can be very annoying if when you need to print something out you have to go into another room in your house to use the printer and even more so if another member of the family is already using it! Make a list of the equipment that you need to run your business smoothly and make sure that it is all set up in your workspace so that you don’t need to go hunting for it.
- Office Environment – The type of room that you working in is very important. The character and atmosphere should help when you are maybe brainstorming or thinking things through. If you do not have scenery to look at you may find that you are not inspired to come up with ideas. Personally, I like to look out of the window and see the trees and plants in my garden as this helps me to concentrate. Also, it helps me feel refreshed at the same time. I know of other home workers who actually work outside in their garden but for me, that would be too distracting! If I saw a weed I might be tempted to go and pull it out.
- Room Temperature – The room temperature is important. It must be a temperature that you find comfortable. If your office is in a particularly sunny part of the house you may find that it gets unbearably hot during the summer months. By contrast, your office may be at the back of the house where you never see the sun and during the summer it’s great, but during winter it’s more like an ice box. Decide what kind of temperature you work best in and feel most comfortable with and make sure that your home office fits. It might mean buying a cooling fan or a heater so that you can maintain the best temperature throughout the year.
- Office Equipment – Every business enterprise needs essential office equipment and furnishings to enable smooth and better functioning of the office. Having the right kind of office equipment creates a professional atmosphere required to run a successful business enterprise. A variety of equipment is available today so it important to choose equipment which is essential, useful and stylish at the same time.
Types of Office Equipment
There are many types of equipment which can be used to enable comfortable working conditions in an office. Therefore, it is vital to select the most important and essential among them to avoid unwanted expenditures. Consequently, the most important among them are:
- Comfortable chairs and desks – Chairs and desks are the most important equipment required in an office. Employees spend time sitting so it is very pertinent to select comfortable as well as stylish chairs. Chairs should have proper support to avoid back pains and injuries. You can also find a variety of desks like metallic desks, wooden desks and so forth. Unlike the earlier days, desks are available in light weight models and in attractive designs and colors.
- Computers – Computers have become quite crucial for any kind of work. Today it is difficult to find an office without a computer. With a variety of varieties and brands available, you can choose desktops and laptops which suit individual requirements and budget.
- Fax machines with printers – Essential office equipment should also include a fax machine with a printer. Today you can easily find varieties of machines with different features.
- Shredders – Paper shredders are necessary for any office to shred papers or documents containing sensitive information. Shredders are also available in many varieties like commercial, professional and personal shredders. While personal shredders are useful for home use, I recommend a commercial shredder ideal for shredding large volumes of paper. Most of the offices use commercial and professional shredders to shred classified details.
- Telephones – Office equipment requirements should also include a telephone. Though mobile phones are very common these days, a dedicated landline telephone may be considered.
- Office Supplies – Even though computers are widely used these days, the importance of the paper, pen, calculators may also be considered. Stationery items are equally important in any business enterprise as are computers and other electronic items.
- Storage – Cabinets are indispensable to any office as they can store important documents and files. You can find wooden cabinets, metallic cabinets, and cupboards made of plywood in various attractive designs and sizes.
Office equipment can be bought online from office suppliers listed in the business directories. There are ways to buy used equipment for office use too. If you live near a metropolitan area like I do, you should be able to find a used office furniture store. I bought a second hand wooden office desk for way less than what a new one would have cost. Most of the used equipment are as good as new. You can also buy designer furniture from many of the office equipment manufacturers online. Furnishing your office requires proper planning and an estimated budget to attain desired results.
Home Office Tax Benefits
If you use part of your home for business, you may consider home office tax deductions. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes.
There are two basic requirements for your home office to qualify as a tax deduction.
- The first requirement is regular and exclusive use which means you must regularly use part of your home exclusively for conducting business. For example, if you use an extra bedroom to run your online business, you can take a home office deduction for the extra bedroom.
- Secondly, it must be your principal place of your business. If you conduct business at a location outside of your home, but also use your home substantially and regularly to conduct business, you may qualify for a home office deduction. For example, if you have in-person meetings with patients, clients, or customers in your home in the normal course of your business, even though you also carry on business at another location, you can deduct your expenses for the part of your home used exclusively and regularly for business.
You can deduct expenses for a separate free-standing structure, such as a studio, garage, or barn, if you use it exclusively and regularly for your business. The structure does not have to be your principal place of business or the only place where you meet patients, clients, or customers.
Generally, tax deductions for a home office are based on the percentage of your home devoted to business use. So, if you use a whole room or part of a room for conducting your business, you need to figure out the percentage of your home devoted to your business activities.
There are additional requirements for employee use. If you are an employee and you use a part of your home for business, you may qualify for a deduction for its business use. You must meet the tests discussed above plus your business use must be for the convenience of your employer, and you must not rent any part of your home to your employer and use the rented portion to perform services as an employee for that employer.
If the use of the home office is merely appropriate and helpful, you cannot deduct expenses for the business use of your home. Publication 587, Business Use of Your Home, provides a full explanation of tax deductions for your home office. This publication also includes the requirements for qualifying to deduct expenses for the business use of your home (including special rules for storing inventory or product samples) as well as the types of expenses you can deduct. Publication 587 also provides guidance on how to figure the home office deduction (including depreciation of your home), special rules for daycare providers, information on selling a home that was used partly for business, information on deducting expenses for furniture and equipment used in your business.
Please consult with your tax attorney or accountant with regards to IRS rules and regulations and your particular tax or IRS situation when considering tax deductions for home offices. For more information, please visit MyTaxSaver.
Hopefully, this article helped you learn how to set up a home office. If you are not seeing the results you want with your business, then it might be beneficial to assess your working environment. Adding some personal touches or items may just be the thing to improve your creativity. And, ultimately, your profitability.
Don’t forget about the tax implications of any business expenses related to setting up a home office.
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