More Americans than ever before work from home due to the rising digital era of commerce and business.
Last summer, Gallup, a research and polling organization, reported the rate of U.S. telecommuters increased significantly between 2014 and 2015 to reach 37 percent of the workforce. A rapidly growing portion of the workforce works entirely from home whether they are self-employed or part of a company's staff.
If you work from home, there are tax and insurance implications that you must know to cover yourself.
GlobalWorkplaceAnalytics.com, a consultancy firm, points out that compared to 2005, 103 percent more employed workers primarily worked at home in 2014. Additionally, the company states 2.8 percent of the total American workforce, or roughly 3.7 million professionals, do so at least half of the time. Of course, self-employed individuals are the most common group that telecommutes. This means that a growing number of individuals need to understand how to handle the tax and insurance matters involved.
Kelly Phillips Erb, a tax law specialist in Pennsylvania, published an article in GPSolo magazine, a publication of the American Bar Association, a nonprofit organization dedicated to assisting attorneys, regarding the potential need for increased insurance coverage beyond your homeowners insurance when operating out of a home office. A home office requires increasing business equipment coverage through a rider, and liability coverage is necessary in case any employees get hurt on the premises. Speak to your independent agent to ensure you have the right coverage. In that same vein, if businesses begin to allow their employees to operate from a home office, they must also understand the liability insurance implications of such a move.
Phillips Erb noted you will also want to understand any and all zoning laws that might potentially make your home office illegal. Commercial and residential zoning tend to be fairly distinct and segregated, so research the rules for your home proactively. In terms of tax implications, make sure you take advantage of the Internal Revenue Service's home office deduction by reviewing the page dedicated to explaining eligibility requirements.
If you run your business from your home office or have employee staff members who function remotely, make sure you focus on sustained productivity, which can be difficult, especially when first leaving the office. Monitoring and communication will be the most important matters when managing individuals in remote offices, and your own productivity should be kept in check when you start operating from home.