Perils of Running a Business From Home
While vacancies in commercial properties have soared in the last two years, millions of business owners who work from home have avoided the burdens of renting or buying office space. Telecommunications technology has made running a business out of your home easier than ever. Recent numbers are murky, but official statistics suggest that a substantial number of businesses in
For many people, never having to deal with commutes or cubicles sounds great. But home-based businesses face some unique challenges.
Other burdens for home-based entrepreneurs are more subtle. They include complicated legal topics that few people think about before they go into entrepreneurship. Here are a few:
The very act of launching a home business could be illegal. Almost every local government has zoning ordinances that limit how much business activity can go on in a residential area. "One of the real concerns is that you might bring in 'unpleasant elements' or excessive foot traffic," says
Home-office deduction Taxes are one area where home-based business owners can run into special problems. That's because they may have a hard time getting the same tax benefits enjoyed by traditional businesses. Perhaps the best example is the home-office deduction. A business owner who owns or rents office space gets to deduct those expenses from his or her taxes. If your office is in your home, you have to determine how much of your home is taken up by your office. You can deduct a portion of rent, mortgage interest, and other housing expenses from your taxes--but only the exact percentage that corresponds to the size of your office. For example, with a 1,000-square-foot home, if your office space is 200 square feet, you can deduct 20 percent of your housing expenses from your taxes.
But it's not as easy as simple math. Filling out the form to apply for a home-office deduction can get complicated. "You almost have to be a CPA to figure out that form. The phrase 'see instructions' appears 14 times on a one-page form," says
Previously, getting the home-office deduction was an even more burdensome process. Because home offices used to be rare, declaring one was a sure way to raise a red flag with
Other tax deductions For traditional businesses, expenses are pretty obvious. "If you're a printer with a big printing press," says Hall, you know the purchase of that equipment is a business expense you can deduct from your taxes. But what if a home-based entrepreneur buys a printer for his or her business use? It's not so easy to claim the deduction when the
Entrepreneurship Is the New Retirement: 10 great places to start your own business. Entrepreneurs never really retire; they just move on to their next project. These days, it's boomers -- not techie 20-somethings -- who most embody the entrepreneurial spirit. Over the past decade, the highest rate of entrepreneurial activity was among people between the ages of 55 and 64
The Senate Finance Committee put forth a new healthcare bill that removes those penalties on businesses. Instead, it offers carrots to employers that provide healthcare, while keeping a few sticks. The bill, associated with its main sponsor, Democratic Sen. Max Baucus of Montana, seeks to expand insurance coverage through the creation of nonprofit insurance exchanges at the state level. These exchanges will be open to small businesses with up to 100 employees
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