Will Working At Home Work For You?

When people go into business for themselves, say as consultants, freelance Technology has made working at home easier than ever before. With such advances as voice mail, E-mail, and fax machines, it's possible to create a much more professional environment at home than was once possible. Even so, you have to decide whether doing business in a place where the kids might barge in anytime or where clients have to trudge up three flights to a converted attic will project the right image. In some fields, it's a nonissue, because clients don't care where you work. That's the case for Sheryl Rudolph, a manufacturers' representative in the Pacific Northwest for H. Warshow & Sons, a New York clothing maker. Most of her customers don't even see her office: She makes sales calls. But in other businesses, clients might take you less seriously--expecting to pay you less, if they hire you at all.

AMATEURISH? Setting up a home office requires some obvious steps: creating a comfortable space that's distinct from the rest of the house, installing extra lines for a phone and fax, buying a computer and a laser printer, and so on. Another worthwhile enhancement is voice mail, which most local phone companies now offer to residential customers. Your telephone system is an important element of your image. Fortunately, voice mail is now universally accepted in the business world. In contrast, an answering machine may suggest an amateurish operation.

Even if your home office fits your image, you still might want to contract for certain services outside. For example, it can be a problem if your business mail is mixed in with the junk mail and personal letters that come to your house. Checks or other important correspondence could inadvertently get tossed out. A solution is to use Mail Boxes Etc. or Postal Annex to handle mail--for about $10 a month. They're better than a standard P.O. box: You can accept and send most over-night packages there.

As a freelance business writer, I do most of my work from an office in my Portland (Ore.) house. Yet I also pay $250 a month to rent an executive suite downtown operated by HQ Business Centers, a national franchise. It gives me a better address, and I can use the space during the summer when the kids are at home banging a basketball against the garage. Plus, I like driving downtown occasionally--it encourages me to meet with professional colleagues, who occasionally send clients my way.

But for Scott Miller, a Portland CPA, neither a home office nor an executive suite did the trick. He found working at home too casual for him to keep his focus on work. "How would you like your 80-pound golden retriever to come up with a tennis ball in his mouth and want to play while you're talking business?" he asks. More important, he realized that he was attracting a lower-paying clientele. The executive suite didn't work for him either, because his clients knew it wasn't a regular CPA office. Now, he shares space with a group of CPAs and has access to their library and clerical staff.

AUDITORS. By associating with other CPAs, Miller spends $500 a month on rent and forgoes a home-office tax deduction. But the write-off is often less than meets the eye--and thus rarely should be the deciding factor in where to put your office. Your mortgage interest and property taxes would be deductible anyway, and the amount you spend on utilities in a year, when apportioned to your home office, is only a few hundred dollars at most. Major capital improvements have to be written off over 39 years. And if you ever sell your house, your home office counts as business property and is not eligible for the favorable capitalgains treatment on personal residences. Accountants also warn that taking a home-office deduction boosts your chance of an Internal Revenue Service audit.

Deciding whether you ought to set up your business base at home may depend less on tax consequences and more on marketing. Some clients won't care where you work. But, fair or not, others may never consider you a true professional unless the place where you hang your shingle is different from where you hang your hat.

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