How To Create A Home Office: Choosing whether to dedicate floor space to a home office is a personal choice. However, today there are greater benefits from a real estate perspective if you plan to sell your home in the future, as home offices are increasingly on Minneapolis home buyers wish lists.
Sanford University announced study results in "Does Working From Home Work?" showing why more home owners are choosing to work from a home office. Home Destination, a professional Minneapolis residential Realtor offers advice on how to create a home office and the merits of buying and selling a home with a home office set-up.
Benefits Of Working From A Home Office
Home Destination summarizes the top benefits Minnesota residents give for choosing to work from home are:
1) save money on gasoline
2) save money on vehicle maintenance
3) save time driving
4) more productive during work hours
5) a better balance between home and work life
Sanford University Study: "Does Working From Home Work?"
Why Over 10% of US employees are now working from a home office and creating a home office is the preferred choice of many home owners.
Stanford's University released findings were conducted from a treatment group consisted of a 13,000 employee NASDAQ-listed Chinese firm, Ctrip Employees who worked from home four days a week for nine months and a control group who were in the office all five days in the work week. After employees were allowed to choose whether they preferred to work from a home office or the shared office work space, the performance impact of WFH more than doubled. Stanford's findings highlight the benefits of choice alongside modern flexible work practices, like being given the option of working from a home office, as reported on November 12, 2012.
Home workers also reported improved work satisfaction and their job attrition rate fell by 50%.
When given a choice, only half of the volunteer group decided to work at home, with the other half changing their minds in favor of office working.
Findings suggest the large impact of work flexibility on employee performance – a $2000 per employee reduction in costs and a 30%increase in the impact on total factor productivity (TFP).
Minnesota Has The Highest Number Of Employees Who Work From Home
As described in the Federal Government Telework Report of 2011, the term 'telework' or 'teleworking' is defined as "a flexible arrangement under which an employee preforms the duties and responsibilities of such employee’s position, and other authorized activities, from a [location] other than the location from which the employee would otherwise work."
Approximately 570,000 Minnesotans,
or 22% of the workforce, work from a home office - a larger percentage of residents than any other state surveyed by Connected Nation.
The average teleworker in Minnesota saves approximately 1,934 miles per year on driving time commuting back and froth to work.
Nearly 1/4 of Minnesota employed teleworkers (23%) say they telework every day, rather than commute to and from work. On average, Minnesota teleworkers say they work from home 1.6 days per week or a total of 80 days per year.
Each individual opting to work from a home office saves an average of $343.16 on car maintenance and prevents 1,411 of CO2 emissions entering the atmosphere.
Across Minnesota, this equals nearly $196 million saved and 804 million fewer pounds of CO2 emissions each year as a result of workers who opt to work from home.
Approximately 695,000 employed Minnesotans would telework if their employer allowed it, and 157,000 Minnesotans who are currently unemployed said they would be interested in working if telework was an option.
More than 4 out of 10 Minnesota businesses with 50 or more employees (43%) allow employees to work from their homes.
Nearly 1/2 of Minnesota businesses in the Financial and Professional Services sector (48%) report that they allow their employees to telework.
Statewide, even though less than 1/4 of Minnesotans who are employees telework, three out of ten businesses (30%) report that they have systems in place for staff to work from a home office.
Creating A Home Office
If you are considering starting a business from home or looking to create a home office for more flexible work hours, it’s important not to overlook the details that your business is still subject to license and permit laws that pertain to working from home. The initial investment required to start a home business should be calculated well in advance.
KEY THINGS TO CONSIDER BEFORE CREATING A HOME OFFICE
Small Business Association "Permit Me" Tool
Zoning laws varry for home-based businesses.
To help business start-ups and homeowners navigate the process of running a business from a home, SBA.gov offers a useful tool called “Permit Me.” Homeowners and renters simply add their zip code and business type to view a list of the licenses or permits needed per location, together with information and links to the application process. It is important to know what your city or county's definition of "residential property" is. Definitions often vary in terms of specificity - some are purposely imprecise to allow for low-profile business activities, like writing, photography,Internet-based businesses, or accounting, while others prohibit all money-making activity.
Home Owner’s Association (HOA) Define Home Businesses
Planned residential neighborhood may nave a HOA restricting business activities allowed from home offices.
Check with Your Home Owner’s Association (HOA) – While your local HOA won’t specify particular licenses or permits, if you do live in a planned residential neighborhood or complex, the HOA can restrict the type of business activities you conduct in your home. Home office activities may be restricted to your Homeowners' Association Covenants (HOA), Conditions, and Restrictions (CC"R) rules. Read "Can a Homeowners' Association Ban Your Home-Based Business?" for the lowdown on the law and your rights.
Home Occupation Permit Or Home Conditional Use Permit
Zoning laws varry for home-based businesses.
Depending on where your home location is, some city and county zoning and planning agencies require all home-based businesses to first obtain a Home Occupation Permit. If a permit is not required by city of your home residence, the zoning office can tell you if your neighborhood is zoned for the home business activity you plan to conduct. If your area is not zoned for your type of business, you may need to file for a variance or conditional-use permit. This guide, Zoning Laws for Home-Based Businesses, has more information about zoning laws for home-based businesses.
Home Office Deduction
There are two basic requirements for your home office to qualify for a tax deduction.
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. According to the IRS, "These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation. The home office deduction is available for homeowners and renters, and applies to all types of homes, from apartments to mobile homes". There are two basic requirements for your home to qualify as a deduction:
1. Regular and Exclusive Use. On a consistent basis, you use part of your home exclusively for your line of business. For example, if you have converted a spare bedroom to run your home business, you can take a home office deduction for the extra bedroom.
2. Principal Place of Your Business. Source for the graphic on the right: PUMS census data for 1980, 1990, 2000 and 2010. Workers were classified as mainly working from home if they answer “work from home” to the census question “How did you get to work last week?” Percentage of the workforce working at home equals number of workers reporting working from home divided by number of employed workforce.
List Of Basic Home Business / Office Needs As Determined by Your Type Of Work
Create a list of your basic home office space needs. The technology requirements your home office needs differ according to the key functions of your work. This will help determine the number of electrical outlets, phone jacks and/or cable outlets. It will help you decide where your workspace should be located and how you can set up your computer equipment. Some workspace may need to incorporate space for your workshop, say if your a furniture re-finisher, craft storage if you are a seamstress, an exceptional kitchen if you are a professional caterer, or with a Jazzercise business, you may need a room with a dance floor. Your list will help you determine what other components of your home or home office that you will require for your unique business.
Your Home Office Layout And Design
Many homeowners find that deciding which furniture you require and would like to have is probably the most fun aspect of creating a home office. Here is where you need to know the dimensions of the space you have available and what style of workspace you want. Do you want the corporate look or something more relaxed? Provide yourself with enough space for a swivel home office chair, to lay out work material at your desk, or to incorporate seating for client meetings, if needed. Consider the amount storage and organization that will best suit your home office filing needs.
Insurance Coverage For Your Home Office
If you run a business from your home, you will be best to work with an insurance professional and explain all your current operations and any potential operations from the home so you can secure appropriate coverage. Yahoo Finance says, "Renters' and homeowners' policies do not cover home businesses. Personal auto policies do not cover autos used for business purposes." A home business is a bonafide business and needs insurance coverage in place like every other business.
Home Businesses: It’s Time To Grow With Optimism
An survey report titled It’s Time To Grow With Optimism, by ExecuNet. Business leaders have been stymied, frustrated and held back by the indecision and uncertainty that has clouded the US economy for more than four years. It is for this reason some economists, authors and other notables have described the global business condition with the term "VUCA" – representing volatility, uncertainty, change and ambiguity. Executive recruiters expect compensation to inch up slightly in 2013 and that companies may be willing to negotiate to land top talent, but pre-recession levels not expected to return until mid 2015.
Many Home Buyers Wish List Include Home Offices
A home office is on its way to becoming an essential item on a Minneapolis real estate buyer's wish list. A home office should be much more than functional — its best if well designed, too. Should you decide to sell your Minneapolis home, having your home office furniture and accessories coordinate with wall and floor coverings will count in the same manner as any other room in the home.
United States Office of Personnel Management
Supporting reasons for trend toward working from home are highlighted by the United States Office of Personnel Management: "Telework program benefits extend from the individual to larger communities. Telework’s potential to enhance work-life balance for individual employees is well documented. Implemented widely across agencies, telework has the potential to improve quality of life for communities, for example, by reducing traffic congestion and pollution. Increasingly, however, the potential for agency benefits drives telework implementation". In the 2011 report 113,946 employees teleworked or 5.72% of the entire Federal population worked from a home office.
If you are a Twin Cities resident seeking to either buy or sell a Minneapolis area home with a home office as a criteria, call Jenna Thuening at 612-396-7832. Or if you are seeking a traditional Twin Cities home sale or to purchase Twin Cities real estate, contact Jenna Thuening at 612-396-7832.
Download the Federal Reserve Status of Teleworking 2012from the Office Of Personnel Management
Download the Federal Reserve Status of Teleworking 2011 from the Office Of Personnel Management
Download the Working From A Home Office by Minnesota Telework Force
Download the University of Maine's Starting a Business In Your Home: Pros and Cons
Jenna Thuening, a CDPE can help you determine how a home office will work for you and potential buyers if you choose to sell some day.
Eden Prairie MN 55334
Jenna's home page: homedestination.com
If I'm out in the field, you may quickly reach me by email: firstname.lastname@example.org and note how I can help you, or leave a message on my voicemail and I will return your call as quickly as possible.