Working from home has become more popular in recent years, with many bosses and employees opting for greater flexibility and convenience. With the ability to turn any space into an office, the allure of avoiding the daily commute and working in your own environment makes telecommuting very attractive. However, there are costs associated with changing your work location, even if you can save money and time on transportation. Understanding these hidden costs can ensure you plan ahead and take the best approach to working from home, while managing your costs.
What Are the Hidden Costs of Working From Home?
When most people consider the costs associated with working from home, the first thing that comes to mind is the cost of setting up a home office. While this is certainly one of the expenses associated with working from home, there are many others you need to consider. The following are just some of the hidden costs to be aware of when switching to teleworking:
- Equipment and Supplies
A home office requires at least a couple of pieces of equipment to do your work on, such as a laptop, printer, digital camera, scanner and more. You will also need other supplies like office furniture and digital storage, such as an external hard drive. The cost of setting up the necessary equipment and supplies can add up quickly, so having access to unused office supplies can save you money.
- Tax Deductions
The ability to potentially deduct some of the expenses associated with setting up a home office could be a major benefit of teleworking. However, you need to understand the tax laws to ensure you’re taking full advantage of the deductions. Making sure you’re properly documenting your expenses and reporting them on your tax return accurately is essential.
- Internet and Utilities
Many people overlook the cost of increased internet usage and electric bills, especially when they’re used to having this covered by the company. Setting up an efficient home office will require a reliable internet connection, and increased electric usage can be a significant expense. If you’re not already taking advantage of energy-saving measures, you should consider doing so to keep costs down.
- Productivity
Working from home can provide a distraction-free environment and allow for greater productivity, but it can also lead to other issues. For example, if you’re not careful to stick to a regular schedule, you could end up struggling to stay focused, leading to lower productivity and missing important deadlines. You may also find yourself spending excessive hours in the office because of the lack of a commute and not having an office space to leave at the end of the day.
- Loss of Social Networking
When you’re working from home, you might miss out on social networking opportunities because you’re not in an office setting. Networking and building relationships within the company is important for career advancement, and although you could maintain connections over video conferencing or messaging, it’s not the same as in-person relationships.
- Loss of Benefits
Although many businesses do offer benefits to remote employees, it’s not a given. That means you could lose out on benefits normally received such as health insurance, retirement savings plans or membership discounts. Companies that don’t offer benefits to remote employees might have other incentives to cover the costs associated with working from home.
- Professional Image
Working in your own home office means you might miss out on the different types of appropriate business attire, both personally and professionally. With most teleworking being done via video conferencing and messaging, you always want to present a professional image to employers and clients, which could be expensive if you need to purchase special attire for teleworking.
- Overhead and Shipping Costs
Although avoiding the cost of renting or buying office space can save you a lot of money, other associated expenses can chip away at that amount. Things like mailing concepts, supplies or products, shipping items to clients and other print-related services can all be accidental expenses that you weren’t counting on.
- Insurance
In some cases, you may need to purchase special insurance to cover your equipment and workspace if it’s not part of your home insurance policy. Plus, if you’re working for a company that requires you to travel for meetings or other work-related purposes, you might be responsible for any additional travel insurance.
- Support Services
When you’re working from home, you’re responsible for setting up your own support system with everything from handling customer queries and accounts to crunching numbers. Although there are many software programs and services you can use, you may still need to hire professionals to handle these tasks.
Tips for Minimizing the Cost of Working From Home
Although the hidden costs associated with working from home can be high, there are a few steps you can take to minimize your expenses:
- Consider Shared Workspace
Shared workspace is a great option for teleworkers who need a more professional office space. Monthly rates are usually much lower than renting a private office, and you will have access to all the equipment and amenities of a professional office.
- Repurpose Unused Equipment
If possible, repurpose any unused equipment or supplies you already have in your home. Whether it’s an old printer, laptop or furniture, the money you save can go towards necessary office supplies.
- Take Advantage of Tax Deductions
If you’re using your home office exclusively for work, you might qualify for the home office deduction, which can significantly reduce your tax burden. Make sure to utilize any tax deductions you’re eligible for, as this is a great way to save money.
- Utilize Energy-Saving Options
By taking advantage of energy-saving options, such as automating your thermostat and using energy-efficient lightbulbs, you can save a decent amount of money on your electric bill. Consider taking other steps such as unplugging appliances or devices when not in use.
- Outsource Support Services
The cost of hiring a professional to handle tasks, such as customer service, accounts receivable and invoicing, can be high. However, with the right freelancer and proper management, you can make sure you are utilizing the services in the most cost-effective way.
Working from home can be a great option for those looking to save money and have a more convenient career, but there are many hidden costs associated with the change in location. Being aware of these costs and taking steps to minimize them is essential if you want to save money and maximize your profit potential. Invest in the necessary equipment and supplies, maximize tax deductions, use energy-saving options, outsource support services, and consider shared workspace to reduce your overall expenses. Doing so will help ensure you reduce your costs and increase your productivity when working from home.
