5 Delusions About Working From Home

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Many think working from home would be easy but this is a misconception. Learn the myths behind telecommuting and running a home-based business.

1 - Big Tax Breaks

A lower tax bill is a poor reason to start a small business these days. In addition to having to pay your own social security tax and payroll taxes (an expense that most employers pay half of), there are the strict limits to what can be claimed as deductions or credits on your return. The IRS or a qualified tax professional is the best source for the facts on if that plane ticket to a business conference or the cost to renovate your "office" can be claimed, but generally, a sole proprietor won't see drastic cuts to their tax bill.

2 - Increased Productivity

It's amazing what you could accomplish with eight straight hours of keyboard pounding and no pesky boss to keep calling you into personnel meetings. Unfortunately, home life has its own distractions that can burn precious daylight and put well-meaning home workers behind on important projects. In addition to the typical interruptions into the nine-to-five (vendor calls, billing issues or internet outages), there are personal boundaries that will continue to be pushed. Try explaining to a close family member why you can't help them move just because you are "at home" or why it's not a good idea to call just to chat. Home workers face unique challenges in trying to handle two colliding lifestyles. It's wise to always budget two to three hours or more each day for unexpected situations.

3 - Financial Savings

Without a daily commute, mandatory lunches and the cost of dry-cleaning, it may seem that working from home will bring a budgetary boost. While this is true for many who start businesses from home, there are additional costs that can crop up. The expense to set up an office separate from your personal needs may include computers, printers, internet, cell phones, business cards, web hosting and software. (Forget about using your existing equipment for your business if you plan on taking the full cost of each as a tax write-off. Personal and business purchases need to be kept separate in order to comply with tax law.) However, savvy business owners and telecommuters can find deals to help cut the bill down to a manageable amount, and purchases can be made as your business requires them.

4 - Reduced Working Hours

It's true that many work-at-home professionals keep a five-hour day, as opposed to an eight-hour day. This does not mean, however, that they work less. Hours are often calculated as "billable hours," meaning that for every hour spent performing a task that they charge for, there are many minutes spent doing non-compensated administrative tasks. These can include chasing down late-paying clients, doing research to keep them competitive in their industry or visiting prospects. Actual hours worked (not charged for) will determine how much a home worker should charge to see a profitable business. (See this handy calculator for figuring out an appropriate rate for your work week.)

5 - More Freedom

Many people choose to work from home after leaving horrible jobs with terrible bosses. The desire to escape having someone "over their shoulder" is a driving force that has caused many businesses to be built from home. What many don't realize, however, is that there will always be someone to answer to - no matter where your office is located. Even as an independent contractor or small business, there will be purchasers of your product or service, making demands and placing expectations on your work. It is true that you can have some say in who you take on as a client - lessening the chances that you'll be stuck working for a nightmarish overlord - but ultimately, the bills will have to be paid. Getting used to the idea that not all clients will be easy to work with is one of the first lessons required of any work-at-home professional.

The Bottom Line

Working from home can be exciting, empowering and profitable, provided you are realistic about the pros and cons. In the end, it's a combination of a great work ethic, valuable skills and brilliant timing that will usher the home worker into a position of success. Many will gladly take the good with the bad to see their dreams come true. (Freelance work is a way to escape the daily grind - but don't ignore the added responsibility that comes with freedom. Check out Freelance Careers: Look Before You Leap.)
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