Home Office or Leased Space?

April 13, 2006

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Before you decide whether to lease office space or to work from home, you have to determine exactly what your facility needs will be. In some cases, your facility needs will be such that you'll have to lease office space. In other cases, your facility needs may be minimal and you can work from home. If you have a choice, and all things are otherwise equal, you should probably work from home, primarily because (1) it's a lot cheaper than renting office space and (2) you have less to lose if your business fails.

But your decision probably won't be that easy. The list below identifies some of the questions you should answer, which should help you further explore your choices.

Are you disciplined enough to work at home? Can you focus on the work that has to be done or will you be tempted to do other things around the house?
Will you be distracted by family and friends if you work at home?
Will customers come to your business? If so, will the customers object to coming to your home rather than a business location? Is there sufficient parking available?
Will you need employees? Is there adequate space for more than one person to work? Is there sufficient parking available?
What are the zoning restrictions, if any, that apply to your home? Are home offices prohibited?
Will the home office deduction be available to you? The criteria for this deduction are very specific.
Can you afford to lease an office at the outset of your business? Working at home could be much less costly.

For a further exploration of the choice between working from home and leasing office space, see our discussions of businesses that work out well from home and government restrictions on business use of a home.