Working from home comes with a ton of perks, and a few pitfalls.
According to Statistics Canada, roughly 8% of Canadians do some or all of their work at home. For some it may be a perfect arrangement, while for others it’s a challenge. Here are some tips to avoid the downsides.
A standard homeowner's insurance policy may not cover a home-based business. Don't forget to ask about business liability as well as asset protection.
If you’re self-employed, the expenses you claim on your tax return need to relate to a work space that’s either your principal or exclusive place of business. It must be used on a regular and continuous basis for meeting clients, customers or patients to be considered your exclusive place of business. Space set aside for your business needs to be used exclusively for the business – a desk in the corner of your living room doesn’t count.
Keep all your receipts and record of payments to help identify any deductions you can claim for your at-home business. You may be able to deduct a portion of your house expenses such as property taxes, insurance, electricity, heat and mortgage interest.
In general, it's not a good idea to claim depreciation on the portion of your home used for business purposes. This can cause tax implications when you go to sell your home. When you haven’t claimed depreciation, your entire house can be seen as your principal residence - and any increase in value of your house may be tax-free.
There are good reasons businesses have regular hours. Regular hours ensure clients know when you’re available and they also help you organize your time, helping strike a balance between your work and your life. They can also help keep your family from interrupting your work – if they know your hours, they’ll know when to stay out of your hair.
Even if your clients will never see it, try to keep your home office clean and organized. It’ll make you more productive and an attractive space can help motivate you to spend more time there, getting work done.