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Benefits of Running a Home Based Business
Increasingly in recent years, more Kiwis are choosing to work from home or start their own home-based business. Twenty years ago, working at home was quite rare, as most people travelled to offices locally or commuted a significant distance to get to work. The movement towards home-based businesses looks set to continue in the near future. Part of the reason is technology — people are more connected than ever before thanks to reliable internet, high-performance computers and smart phones. With these tools, it’s easy to be accessible to anyone anywhere in the world, and common tech provides a baseline starting point for people interested in starting their own home-based business.
Statistics show 17.9 per cent of New Zealand residents were self-employed in 2016, a higher percentage than in the United States (6.4 per cent) and many European countries. Self-employed is defined as “the employment of employers, workers who work for themselves, members of producers’ co-operatives and unpaid family workers.” Unpaid workers are not employees who receive no wages, but rather individuals who are employed by a family business but don’t receive a fixed income at regular intervals, instead sharing in the income generated by the family business.
Industries Suitable for Working at Home
Not all businesses are suitable for working from home, but many industries lend themselves to the possibility, including:
- Service and consultant-type businesses, which includes freelance writers, bookkeepers and financial advisors
- Technology-based businesses, including website builders, IT consultants and software developers
- E-Commerce businesses that sell mostly through the internet without a brick and mortar store
- Small-scale or hobby-type businesses, such as catering or seamstresses
The Benefits of a Home-Based Business
Ambitious entrepreneurs can enjoy considerable cost savings when they run a home-based business. Commercial rent is non-existent, and there are likely few (if any) employees to pay a salary. Self-employed individuals also don’t have to pay public transport costs or buy petrol for their vehicles, since there’s no commute involved when you’re working from home.
All expenses related to running your business from home can be deducted from your tax return, although this is true for any business. One difference is you’ll likely have to work out what percentage of your home is used as an office. For instance, if 10 per cent of the home is used for your business, then you can generally deduct 10 per cent of the property rates bill (if you own the house) as a business expense. Portions of an electricity bill, for instance, can be deducted as well, especially if you feel that keeping the house warmer in winter or cooler in summer for your business’s operation results in higher electric bills. Consulting with an accountant in this instance would be appropriate, as they can help you determine what percentage of electricity costs should be deducted. A portion of mortgage interest can also be claimed, as well as a portion of internet usage that’s related to your business’s operation.
Tranquil Working Environment
Many people feel more productive working at home because they’re free of distractions, which are more typical of traditional offices or other commercial environments. There are fewer interruptions overall, besides those that come from personal friends or family.
When you run a home-based business, you can essentially set your own hours. Although it’s generally advisable to work the same hours as other business you deal with, some work can always be completed at night or on the evenings when access to your offices isn’t an issue. It can be more difficult to maintain disciplined work routines when working at home, and it often helps if a designated office space is set aside for matters related to the business.
Attractive Prospect Come Selling Time
When the time comes to consider selling your business, knowing it’s home-based is an attractive option for many people. The flexibility, cost savings and tax perks that a home business provides, are all appealing features for someone seeking the same type of benefits that led you to start a home-based business to begin with.