Is it Time to Move From Your Home Office?

Posted on October 1, 2002 by LCT Staff - Also by this author

Many operators are faced with the question of when is it time to move from your home office to an actual office. Take a look around and ask yourself some questions. Are the file cabinets in your home office ready to burst? Are you on the threshold of hiring two more chauffeurs? Maybe you want a more professional look for your business, along with more space.

As you know, when you're running a two- or three-car operation, it might be more convenient and cost-effective to operate from home. However, if your outgrowing your current space, perhaps you should seriously consider shopping around for commercial office space.

Outgrowing Your Home Office Whether you're successfully operating out of a home office, or whether you have business documents scattered around your home, space is often the first consideration when deciding to relocate a growing business.

A commercial office can give your business a more professional appearance, along with the opportunity for more "drop-in" clientele. More space also affords the ability to perform more of the mechanical repair work on-site, along with ample parking for customers.

The Downside of Leaving Home

If you've been operating out of a home office for awhile, moving will cause you to make a lot of compromises. It can be an adjustment, just making the daily commute to a "real" office.

"It's a difficult adjustment to make," says Don Kensey of Au Premiere Limousine. "For years I have had the convenience of being upstairs from work. If I felt the need to see if a chauffeur had picked up his car, I only had to look out the window."

Kensey points out the obvious benefit of forgetting something in the office and being able to walk downstairs to retrieve it, and his new commute to work means he won't be home when his kids get home from school. He adds jokingly that this could be considered a major advantage. You may find that any anticipated cost savings when moving to a commercial office location will be accounted for elsewhere.

For Kensey, any cost savings he had hoped for will be offset by additional utility bills for heat, water and electricity, along with construction and renovation costs. Count on the need for additional insurance as well.

Home is Where the Heart Is

"My home office space works for me," says Glen Stafford, owner of Love Limousine in Richmond, Va. "My business is very heavily corporate-based, and we've got to where we have the stress level under control,"

Having recently turned down new business in order to keep vehicles available for his steady clientele, he feels there may eventually be a need for additional types of vehicles, such as vans or suburbans.

"If we generate enough requests to justify that we're giving away too much business to somebody else, then we'll get other vehicles," he says. However, an additional vehicle or two will not influence Stafford's decision to remain at home. "I'm not interested in being a 25-car operator, or the biggest guy in town."

Tax Considerations

Whether you're a home-based operator with a room dedicated solely as your office, or your business is located in a commercial space, the same items are deductible when it comes to taxes. The only difference is in how the items are allocated. With a home-based business, the challenge comes with paying your mortgage and figuring out the expenses to allocate to your home office. In a commercial office space, you are essentially managing separate bills, and there will be additional expenses such as insurance.

Although all expenses for a commercial office can be written off, in reality the costs you write off have now increased substantially from your home office levels. This additional expense can only be offset by additional revenue.

As a home-based operator, you must be able to prove to the Internal Revenue Service that you use your home as your principal place of business. To take a tax deduction for business use of your home, you must meet certain requirements. For details, see IRS Publication 587, Business Use of Your Home, which also has information on what you can deduct. Or go to: www. irs.ustreas.gov.

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