In or Out: The Pros and Cons of Home Offices

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Two years and two months ago, I burned all my suits.

Give or take a few days, this was around the time I quit my job and set up shop on my own. I had a little fire in my back yard and did an unseemly dance of joy that caused a neighbor to call the police. No charges were filed, and I haven’t worn a tie in 24 months.

What I’ve done, of course, is set up a hell of a home office. It’s not the first one I’ve had, and I’m sure it won’t be the last, either, but it’s by far the best. I have all the amenities of a major firm, and I have my freedom and independence to boot. I also have the drawbacks of working from home—the isolation, the long hours and more. But I’ve found my own ways around them, and you can too.

Pros = Cons
As those of you who work from home already know, the pros of having a home office are also its cons; in essence, each is the flip side of the same coin.

Let’s take an example: If you work from home, you can work in your undies. (I don’t, but you’re welcome to. Just be sure to keep your shades drawn.) You can get as comfy as you like, and you’ll save a few pennies on the clothes you’d have to buy—shirts, ties, the fancy dress shoes and such—if you worked in a “real” office.

Not bad, right? In truth it’s a matter of temperament. There’s something to be said for getting up in the morning, getting showered and shaved, and putting on a tie. It makes you feel professional. It gets you in the mood, so to speak. And it gets you ready to go to work. But when you work a room or two away from your bed, it’s hard to find the discipline, drive and energy you need to push a small business forward. Keep in mind that being an entrepreneur is first and foremost a test of endurance. Hence the first lesson of having a home office: Whether or not it’s right for you is a question of personality, not just money.

It’s also a question of driving. If you work from home, you won’t have to commute to work, and that’s nothing to sneeze at. Let’s say you spend half an hour a day in the car. That’s two and a half hours a week, or roughly 125 hours a year, presuming you work 50 weeks per year. (Most of us, of course, work more, but this will do for now.) If you work no more than 40 hours a week, that’s three full weeks you’ll spend on the road. That’s fine if you’ve got a new Porsche, but if you don’t, it’s a heck of a stretch you could spend on something productive, like finding new clients or (gasp) doing your taxes.

But, as we said before, the pros and cons of a home office are one and the same. True, you won’t spend hours per week in your car, but if you’re less than careful, you’ll get stuck at home for days at a time. You won’t have the access to people, conversation and the give-and-take of office life that you’d have in a building downtown. And you’ll start to get lonely or even depressed if you don’t watch out. The remedy? Be sure to get out as much as you can and keep your social life active. If you don’t have a social life, use this excuse to get one. Oddly enough, you’ll be more productive if you know how to stop working—and working too hard is one of the first symptoms of home-office burnout.

Common Cents
If you’re smart, a home office can pay for itself. It can also empty your wallet if you’re not careful.

Working from home is cheaper than renting an office with a posh business address. Even a small office in a reasonable building (not a steel-and-glass tower) can run you $500 a month, or $6,000 a year. For startups and small consultants alike, that’s a hefty sum. And there are tax breaks, too. The IRS lets you deduct a portion of your home-office expense from your tax bill, providing you follow their rules to the letter. Of course, there’s a caveat: The rules are Byzantine, and deducting your home office is a known audit flag. In fact, it’s such a concern that many consultants skip the deduction rather than risk the audit. Hence, a piece of advice: Talk with an accountant before you claim your home office. It’s too easy to make an honest mistake that won’t look too honest to your friendly IRS agent.

Here’s another glitch: If you claim a portion of your home as a home office on your tax return, it may be considered a business property by your city or state and open you up to a hefty tax bill if you sell your house. (For those of you renting, of course, this is moot.) Once again, chat with an accountant to make sure you’re doing it right and saving what money you can.

There are other, simpler ways to save money by working from home. The first, believe it or not, is lunch. A steak-and-cheese sandwich from Subway is $6 and change. That’s $1,500 a year, if you eat out Monday through Friday. And there are days when you’ll spend more than $6 on lunch. Working from home, you can simply head to your kitchen and whip up a soufflé—or just a bowl of cereal if you’re not Julia Child.

Size Matters
Far and away, the biggest con in having a home office is the fact that you’re marked, a bit like a scarlet letter, as a small business. You can’t run IBM from your bedroom, and if your work is the kind that requires you to meet with clients daily, or project an image of size and sophistication, you’ll need to give them a place to meet you. At the very least, you’ll need the right business address, which never ends in “Apartment B.”

But you can still project a big image if you run your shop from your bedroom. First, get yourself a good Web site—not a cheap, mom-and-pop site you bought for a hundred bucks, but a site with a real designer and clean, sleek graphics. Invest in a phone system that creates the illusion of size. Believe it or not, a good one can be surprisingly cheap. Point your browser to TollFreeLive.com, TheCornerCube.com or WorkEasy.com for starters. There are dozens more on the Web; just find the one that’s right for you and fits your budget.

Speaking of the Web, a good way to keep your clients from coming to your home, which is less than conducive to business, is to meet with them online. We’ve come a long way since the first days of Microsoft NetMeeting. For a reasonable fee, you can open a WebEx account (www.webex.com) that lets you make presentations, demonstrate software (including your own), share and edit documents or conduct Web tours via the Internet. If you make your living by giving desktop support, the WebEx Support Center lets you conduct remote support sessions on clients’ machines. You can view and solve problems, run applications, transfer files and record the entire session for training or reference, all without leaving your home.

Do It Right
Last, a few tips on setting up your home office. In a nutshell, it’s crucial to give yourself all the convenience—and all the technology—you’d have in a large office. In other words, don’t skimp or you’ll pay the price later.

First, make sure you’ve got some kind of fast access—cable, DSL or DSL “light” if you’re on a budget. It’s silly to waste time on long downloads when there’s so much to be done in a day. Next, keep a fax machine on a separate line so you have a dedicated fax number. (Not having one is a dead giveaway of a small business.) If you rarely send or receive a fax, or don’t want the expense of installing a second line in your home, use a Web site like eFax (www.efax.com), which costs $10 to $20 a month. It’s a cheap and useful alternative in the age of e-mail and instant messaging.

As for phone lines, be sure to get enough to handle all your calls—one may be good to start with, but you’ll need more as your business grows. Clients hate to be kept on hold.

If you travel with any frequency, you’ll need a way to access your home office from the road. Use programs like pcAnywhere or LapLink, or if you prefer, a Web site like GoToMyPC.com for remote access. All are reasonably priced and install

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