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The hidden expenses of working from home

In my previous article I gave some tips on beginning the journey into being an entrepreneur from the comforts of your own home. While that article covered the basics of business in general, what about the nuts and bolts of YOUR business?

Your dive into the world of starting a business at home should include a business plan. And I’m sure you have explored all the options of writing the plan itself, but have you thought of everything that needs to go into your plan?  Really?

No?  That’s what I am here for.

Dedicated office.  Have you considered all aspects of your office space? According to IRS guidelines, you can only claim a tax deduction if you use a part of your home “exclusively and regularly” as a home office. (As always, check with a tax professional for a full explanation of the IRS guidelines) For example, your kitchen won’t count as your office if you also use it to eat dinner with the family. Your sofa doesn’t count if you also use it to cheer on the Denver Nuggets with your pals. So, consider setting up a "For Work Only" area of your home which means you will need a full scope of office furnishings and electronics.

Meeting space.  Where are you going to meet clients?  If your dining room table doesn't convey the right level of professionalism, there are office suites available for conferences and other types of formal meetings. Will you need to calculate that into the expenses side of your business plan?

Childcare. Unless you are a master of intense multi-tasking, I suggest childcare for your children while you are working at home.  While you may not be able to expense such a thing in your business plan, it is still a consideration of your bottom line.

Utilities. Have you looked into how your utilities will be affected?  Everything from the electricity needed to power up office equipment to the extra phone line for the fax machine adds up to a pretty penny by year end.

Marketing.  What have you included in your expenses for marketing?  Hopefully you have thought outside the box of business cards and brochures.  Factor in any membership dues for local organizations, meal expenses for networking lunches, and how about a marketing consultant?  These items are critical for your  overall success.

These often-forgotten expenses are a handful of many.  In fact, I think I have already forgotten several start-up costs that surprised me as I started my at-home business.  But perhaps this will help you brainstorm and think of miscellaneous costs so you can prepare a comprehensive business plan.

Comments

  • Jill Harrigan- Denver Vegetarian Examiner 4 years ago

    These are great things to think about. I also just wanted to mention that Mi Casa Resourse Center offers classes to help people come up with a solid business plan. Mi Casa Resourse Center is located in Denver, and is run by really friendly people who try their best to help you succeed.

  • Emilia Rak 4 years ago

    Coming from a long line of entrepreneurs I can tell you that the biggest thing that people forget to think about when they fantasize about going into business for themselves (because everyone thinks that being your own boss is so glamorous and easy) is that if they fail to bring money in (meaning not just what they bring it but what is left over after expenses divided by the number of hours there are in a day) the electric gets shut off, your family doesn't get fed and your home gets put up for foreclosure.

    Self-employment is definitely not for anyone who isn't a self-starter and adaptable. If you don't get a rush from "baptism by fire" or "sink or swim" situations then keep your 9 to 5.

  • Shamontiel (Chicago News & Events Examiner) 4 years ago

    One thing I realized fast is how much I use ink. I am constantly in Best Buy buying Brothers ink cartridges, which aren't all that popular, but I highly recommend this printer. I got used to everything else like the phone usage (if you get a good rate plan for long distance and local toll calls you'll be okay) and using more electricity. But the ink cartridges and paying for gas going back and forth to events hit me in the pocket. Fortunately my car is new so that helped a lot in the car expense area, but that's what I'd recommend most. In your own business, definitely have reliable transportation if you're a field reporter or have any job that requires you to constantly travel.

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