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I cannot stress enough the importance of knowing what the IRS has to say when defining a home office and what you can deduct as expenses. Know the rules and follow them! Why cheat on your office expenses if you chance trouble which could lead to the eventual failure of your business and loss of income.
You must follow the IRS guidelines for a home office. Completely review the requirements and then ensure you comply with them before claiming expenses related to your office on your tax return.
If your business requires you to meet people frequently, then your office needs will be much greater. A big item to remember though is that you, hopefully, started your business to make money. Therefore, before spending money on office equipment and furnishings, keep in mind how they will assist you in making money.
If you work from your home then you want to have a very comfortable office to work from. You will be spending the time you would normally spend working outside your home in your own home office. So make it comfortable. If at all possible put it in a room that you can dedicate to only your business use! Equip and furnish it totally within the IRS rules. Make sure you have all the items you need to perform all of your business activities within this room.
For a "Home Office", you do not need a lot of fancy furniture or equipment. A couple of two drawer file cabinets and a hollow core door placed on top of them, make an excellent desk top and work area. You also have the advantage of being able to run all your cables down the hole that is there for the door knob. You can stain or put contact paper on the top to make it appear any way you desire. Best of all, it is very economical and practical.
If your home office is to be a little more formal because you will be meeting clients, you can still use the above procedure. Just add some 1/2" ply board at both ends and on the side the customers will see. Stain or cover to desired appearance. Formica is easy to apply and give it the appearance of a desk costing several hundreds of dollars. Meantime, you have saved hundreds.
A little hint here! Only install two or three games on that computer, actually any computer located in that room! Why? It is a business office and the computers are for business use and not personal use!
NOTHING in the room is for PERSONAL USE! If the kids need a computer to do homework or you need to play games on the computer, get another one and put in somewhere else in the house but keep it out of your office! Keep the IRS happy with what you claim to be a "Home Office".
A little TRICK. For a "Home Office" adjacent to you living area, cut a hole in the wall and frame it.
This trick will accomplish several things for you. You can watch that program on TV that you must see without stopping work! If guest arrive while you are working, your better half in life can let them into your home and seat them in the living area. You can tell them you will be right with them, but you must finish this one task first.
Guess what…….. You are indirectly advertising (to your guest) that you have a home office and are working. If/when they ask, it is the perfect opportunity to give them your '30 second elevator speech'. This works especially great when you are entertaining other professionals.
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