Work From Home or Rent an Office? Pros and Cons

Being self-employed often means deciding whether to work from home or rent an office. Here are the pros and cons, along with tips to find cheap office space.

Last year, I left my full-time office job and started working from home. But after only a few months, I realized I needed to go to an office. While there are few things as satisfying as giving up a lengthy commute, I quickly realized that a home office comes with its own problems – and expenses.

I’ve since rented office space close to my house, where I write for Money Talks News and other sites. But one of my Money Talks News co-workers calls me crazy. Michael Koretzky is a Money Talks editor who has worked at home for more than a decade and written about it (check out 5 REAL Tips for Working from Home and 10 Tips for Working for Yourself – Without Working Yourself to Death).

If you’ve started working at home and are wondering if it’s worth the money to get your own little office, here’s a debate Michael and I had recently…

1. Consider your environment

JASON: When I lived alone in a small high-rise condominium, it was quiet and comfortable. Then I got married and moved to a beautiful 1937 brick home in Denver – but it’s cold in the winter and hot in the summer, so I need to run the heating or air conditioning all day long at full blast. That was fine when my wife and I were gone weekdays at work. It’s expensive when I’m there all day, every day.

MICHAEL: The trick is to carve out one space and ignore the rest of the house during weekdays. Unlike you, Jason, I live in Florida, so I chose the coolest room in the house for my office so I wouldn’t need to run the AC all day. I also bought a fan, and I drown out the sounds of chatting neighbors and playing children with some classical music, which is easy to work to.

2. Calculate expenses

JASON: Sure, renting space in an office building costs more than working from home, but it wasn’t as bad as I thought. In addition to energy savings, the office I’m subleasing also includes Internet service and the use of a professional-grade printer, fax machine, scanner, and copier. For $150 a month, I also have a room with a door and even a decent view out the window.

MICHAEL: Yeah, well I spend nothing on rent. Sure, I have to buy my own printer, scanner, and office equipment. But over the years, they’ve more than paid for themselves – and I deducted them from my taxes. I do pay for a faster Internet connection at home, but I deduct part of that, too, and my wife benefits when she comes home and surfs the Web.

3. Avoid distractions

JASON: With a wife and a 4-year-old child at home, there was little doubt that my productivity soared when I started renting office space. Other distractions at home include television, the kitchen, and even the neighbors.

MICHAEL: Well, I don’t have kids, so I’ll concede this point. But avoiding the TV, kitchen, and neighbors is something I’ve written about before – because it’s a fallacy to think that working in an office is all work. When I did work in an office, I took lots of hidden breaks – talking to co-workers, taking coffee breaks, trips to the vending machines. No one works eight hours straight. So at home, I take lots of short breaks, and I still get my work done.

Four Tips to Finding an Affordable Office

If you side with me over Michael and decide to rent an office, take these tips…

1. Search for subleases. Like families trying to rent out their basements, many small businesses have an extra office they can sublease to help their bottom line. Likewise, sharing space reduces everyone’s expenses.

2. Look into executive suites. This is a type of office arrangement where workers rent a desk or a room to themselves, but have shared use of common resources such as conference rooms, office equipment, and even receptionists.

3. Consider virtual offices. This is a popular service that allows workers to rent space for part of the week. This is ideal for mobile people who can work with just their laptop and briefcase when they need to.

4. Scour Craigslist. Normally, businesses that are looking for office space will use the services of a commercial real estate broker. Unfortunately, a broker won’t be very interested in taking on a client who’s only seeking office space for one. Therefore, you’ll need to find the listings yourself. One of the best places to do this is on Craigslist. To find individual offices, search with the terms shared space, sublease, and office suites.

In the end, I was fortunate to find a sublease arrangement where I occupy a private office next to an insurance broker. Although I have to make a short commute, this arrangement is easily justified by my comfortable work environment and my increased productivity – whatever Michael might think.

Stacy Johnson

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  • Raven Dupres

    I became unhappily aware that there is a hidden expense to declaring a tax deduction for a home office. Your house or condo is then declared commercial property instead of your home and you have to jump through hoops when you try to sell it. If you are selling your personal house, where you and your family live, you then have an entirely different tax base then you would normally have if you declare your mortgage payments etc. as a tax deduction. However, if you stop declaring part of your home as a home office three years before you decide to sell, you can then sell your home without all the hassle. So taking a deduction on a home office may change your tax base when you sell the property unless you know that you will want to sell it in three years and stop taking the deduction for three years before you sell. It’s just not worth the hassle to get that $90 back each year because you are working in your walk-in closet or spare bedroom.

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