Ohio State University Fact Sheet
Community Development
700 Ackerman Road, Suite 235, Columbus, OH 43202-1578
Pros and Cons of a Home Business
CDFS-1000-94
Small Business Series
William G. Owen
There are more than 15 million home-based businesses in the United
States today. There is good reason for that high figure. Having a
business in your home can provide flexible working hours and give you
the luxury of being your own boss. Also, there are disadvantages to
working at home that must be considered. Several are discussed in
this fact sheet.
Family and Lifestyle
Operating a business from your home must be a family decision because
the entire family is affected. Space used now for family activities
may be taken over by the business. Personal phone calls may need to
be shortened if the family phone is also the business phone. If
customers will be coming to your house, extra effort will be needed
to keep at least one room presentable at all times. Family members
must realize that family activities may take a back seat to business
activities, including last minute scheduling to fit a customer's
schedule. Calls and visits from customers can be expected at all
hours of the day or night, including mealtimes and weekends.
While
there are drawbacks to a business in your home, there are indications
that the business can also bind the family together and that divorces
in families with a home-based business may be fewer than those
without. The business can provide a focal point to involve the entire
family and can lead to increased communication and understanding. It
can also help family members learn life skills such as answering the
phone properly, entertaining customers and taking orders.
Personal Commitment
Managing a business at home provides an opportunity for more flexible
work hours, but it also requires more discipline than working outside
the home. It is easy to delay getting started or allow the
distractions of your home to interfere with business activities. If
you have trouble concentrating, perhaps setting standard working
hours for yourself or shutting yourself off from those distractions
can help.
While business activities are important, so is your
commitment to your family. Working at home allows you to schedule
business hours around your family's schedule. It means that someone
will be home when the children are not in school. It also can keep
you from losing a day's wages from an outside job due to the hassle
and expense of finding a last minute babysitter.
Financial Benefits
There are some real financial benefits associated with operating a
business from your home. Usually, a home-based business adds little
to the overhead of operating the home, certainly not as much as
renting an outside facility and paying for its upkeep. Expenses are
also less for transportation, outside meals and clothing if you don't
have to leave the home. At the same time, a home-based business can
lead to a feeling of isolation if you don't get away occasionally.
Tax Benefits
The Internal Revenue Service allows you to deduct certain costs of
maintaining your home from your income tax if part of the home is
used exclusively and regularly as 1) the principle place of business
for any trade or business in which you engage, 2) a place to meet or
deal with your patients, clients or customers in the normal course of
trade or business, or 3) a structure that is not attached to your
house or residence and is used in connection with your trade or
business.
Portions of such expenses as water and sewer, electricity,
mortgage interest, and real estate taxes may be deducted as business
expenses. You may deduct the same percentage of these expenses as the
percentage of the house you use for business. For example: If you use
10 percent of your house solely for business purposes, you may deduct
10 percent of your utilities (excluding phone service), interest,
etc. For complete details, consult IRS Publication 587, "Business Use
of Your Home."
Home Security
Running a business from your home may involve strangers visiting your
home. This factor should be considered carefully, and it certainly is
a good reason to carry adequate insurance. Decide which personal
items might be attractive to a thief and keep these from view. Take
steps to protect your person as well.
Conclusion
Running a business from your home can be very worthwhile, but it
requires careful planning and input from the entire family. Carefully
consider whether the sacrifices are outweighed by the benefits. If
the advantages outnumber the disadvantages, perhaps you should join
the ranks of home-based business owners.
Material adapted from "Electric Cottage" by Alvin Toffler. Published
June 1980, Across the Board, pp. 58-64.
All educational programs conducted by Ohio State University Extension
are available to clientele on a nondiscriminatory basis without regard
to race, color, creed, religion, sexual orientation, national origin,
gender, age, disability or Vietnam-era veteran status.
Keith L. Smith, Associate Vice President for Ag. Adm. and
Director, OSU Extension.
TDD No. 800-589-8292 (Ohio only) or 614-292-1868
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