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Running your small business from home

Friday, August 7, 2009
Working from home. Image: Getty
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By Diana Clement
MSN NZ Money writer

Starting your business from home can save a great deal of money and reduce risks. Unless you have a retail business, the chances are you can set up an office in your home and a workshop or warehouse in your garage.

Advantages of working from home
The obvious advantage is that you don't need to rent premises. You can also wear pyjamas to your office if you want.

Other reasons to base your business at home:

  • You can be a stay-at-home mum or dad and still have a business.
  • The Internet is blind to location.
  • You can avoid the commute.
  • You want 24/7 access to the office.

Some pretty large businesses were started from home. They include Pumpkin Patch, Navman and Trade Me.

Disadvantages of working from home
There are pitfalls to working from home. Some people find their clients may not take their business seriously. There can also be an awful lot of interruptions from chatty friends and needy neighbours who just don't understand that you should be working.

Children, especially young ones, have a habit of answering the phone or being generally noisy in the background. Even dogs and cats can disturb phone calls.

One of the big problems that home-based entrepreneurs report is that the separation of work and home life becomes fuzzier. They find themselves working all hours because it's too easy to pop into the office. As a result, burnout is a big problem for home-based businesspeople.

Some good tips for home-based businesses include:

  • Set a structure to your day to make you disciplined about when you work and when you rest.
  • Create yourself an office or work zone. Sharing a computer with the kids or basing yourself at the kitchen table just doesn't work.
  • Invest in good ergonomic furniture, a filing cabinet and good lighting. You're going to spend a considerable time in your office.
  • Get an additional telephone line for your business so that you can determine whether it's a business or personal call.
  • Consider getting virtual assistance such as a receptionist, or secretary so that your business goes on even if you're not there.
  • Shut down the computer on weekends and leave your mobile at home when you're on holiday.

There are tax advantages to working from home. For example you can claim a portion of the expenses of running your home equivalent to the size of your home office. If, for example, the floor space of the office makes up 10 percent of the home, then 10 percent of the electricity bill, mortgage, rates, and so on can be deducted against your business income. Items that are used solely in the office can be claimed in total.

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