Expand Your Home Office! (written September, 2003)

Starting a home based business sounds incredibly simple. Just clear off the kitchen table and dive in, right? Not so fast! There are a host of start-up issues that must be addressed – whether you’re starting a part time enterprise or a multi-million dollar corporate empire. One of the many tasks that prospective home based business operators must deal with is creating space for their home office. Alternatively let’s say that you started your home business a short time ago on the proverbial kitchen table. Never in your wildest dreams did you think that it would take on a life of its own and leave you asking the question, “Where can I find the space to expand my business even more?”

Places to look: The burgeoning home business industry has many homeowners (and house hunters) asking the same question and looking at the layouts of houses with an ever more scrutinizing eye. Some houses have basements and/or attics that can be utilized for office space, although these areas may require cosmetic work as well as additional heating and lighting improvements to make them more suitable and comfortable. These two areas are often underutilized for purposes other than storage and a home office would certainly make cost effective use of them. Additional possible ways to convert house areas into home office space include: using a sunroom; enclosing a porch; using space in an underutilized laundry room; using pantry space; using an oversized garage (this is what I do!)

Put your imagination to work: Home business owners are a unique breed of people with a unique way of looking at things. Recently while visiting a friend who had just moved into a new home, we noticed a large playhouse (almost the size of a small garage) that was situated off to the side of the spacious front yard. We mentioned that her children probably really loved that extra bit of play area. She informed us that the children weren’t allowed to use it because her husband used it as his home office. Where one person saw a playhouse, another one saw a place for a home office.

Be practical: Room dimensions are an important factor to consider when deciding where you can squeeze out the extra space. You need to consider that the area will have to accommodate a desk and a chair, as well as file cabinets and all the other accoutrements of your chosen home business operation. And don’t forget to take into account electrical outlets and access to phone lines (although the widespread use of cell phones for business purposes might make this less of a factor). Before you start knocking out walls, make a list of all the basic functions that you’ll be performing over the course of a typical work week in your home office. What kind of extra space do you really need? Most home business people opt to use the spare bedroom. The area of this type of room may be as large as 18 x 24 feet – giving plenty of room to spread out. Or it may be as small as 8 x 12 feet. In the smaller room, additional space may be found by removing closet doors and using space creatively. Use your creativity by building in a credenza and by adding shelves recessed into the closet above the credenza to hold computer/office supplies or reference material. Another way to increase storage area is to install a floor to ceiling bookcase along one wall, equipped with a rolling ladder to reach the top shelves.

Equip your home office wisely: Many of the office machines you need to run your home business have dropped precipitously in price and are within reach of the home business operator. However while each of these machines is small enough in and of itself, when you start to add up the space each takes, along with the room already occupied by a desk, chair, computer and printer, you might begin to feel the walls of your office space closing in. Many office machine manufacturers are now offering all in one machines that multi-task. Visit your local office supply store and acquaint yourself with some of these new space-saving machines.

Check out new space-saving office furniture: If you’re really tight on space for your home office, many of the office furniture manufacturers have come up with modular systems that include a desk, computer station and work area, all in a unique roll away design.

Explore the great outdoors: Don’t forget the wide open spaces of your backyard. Like the previous example of the playhouse turned office space, several companies are offering small (around 500 square feet) of backyard office space. The unit is manufactured pre-cut, ready for quick construction at a reasonable cost.

Hit the road: When some home business operators run out of space, they put their home office on wheels. Many businesses, such as landscaping can be conducted from the convenience of the owner’s vehicle. If you can purchase the equipment for your home office, you can more than likely purchase the same service or equipment for your car office.

Make sure you qualify for tax benefits: There are tax advantages to owning a home business and operating a home office. The IRS requires that your home office be used “regularly and exclusively” for your home business. The “regularly” requirement is satisfied by using the office on a regular, daily basis – not a very difficult prerequisite to meet for most home based business owners. The “exclusively” precondition, however, can trip up even the most successful entrepreneur. “Exclusively” basically means what it says. To qualify for the home office deduction, you must use your office solely for business purposes. If you qualify, this tax break can be substantial. This deduction is based on the size of your home office relative to the total square footage of your home. You need to distinguish between repairs to your home, for which the business percentage is deductible and permanent improvements, which must be added to the basis of your home and depreciated over a period of years. Repairing a roof or patching a leak is classified as a repair item. Permanent improvements increase the value of your home versus merely keeping it in good working order. Examples include remodeling, additions to your home or laying a new roof. A final note on how the IRS views business expenses: Even though you may meet every other test and requirement of the business use of a home office deduction, Uncle Sam additionally dictates that all business cost claimed be “ordinary and necessary.” Rooms, hallways, closets, storage areas – all can be used as home office space when a little imagination is applied. So now it’s time to get out your broom and cleaning supplies. Clean up the area. Then start squeezing that extra space from what you already have available!

The author of this article is Larry Costello, President of All-American Print & Mail, 2200 Wilson Blvd #102-57, Arlington, VA 22201.