Is a Home Office Worth It? Will I Really Save Money?

Are you thinking about setting up a home office for your business? Read up on all the financial aspects of working from home.

With technological advances and the rise of telecommuting, more people are choosing to work from home. Around 1.7 million people in the UK worked from home before the coronavirus pandemic. With the government encouraging people to practise social distancing and work from home when possible, that number rose to around 20 million. Setting the pandemic aside, let’s compare working from home and renting a separate workplace, concentrating on the financial aspects. Does having a home office really save you money?

Keep Business Overheads to a Minimum

One of the main advantages of working from home is that you can save money on business overheads. Instead of paying extra rent, utility, phone and broadband bills, you’d only have to pay one set of bills. This can save you a fortune, especially when you’re setting up a business. Money is usually tight, and start-up businesses often have cash flow problems. Many need to use start-up loans to cover initial costs, so every bit of saving helps.

An added bonus is that when you do your tax return as a self-employed person, you can claim a portion of these expenses back. HMRC will take into account that your home is also your place of business so some of these expenses will give you a discount on your income tax.

Creating a home office means work is just a 10-second walk away. If you rent a room outside the house, you will have to fork out extra money on petrol. Also, let’s not forget all the additional expenses of using your vehicle more frequently – general wear and tear on the car and increased maintenance costs. Don’t forget about higher insurance for the higher mileage, parking tickets, etc. And of course, you may be desperate for a cash loan if your car breaks down and you need to get to work! Alternatively, if you would commute to your place of business by public transport, you will save hundreds of pounds on train or bus tickets.

Cutting down on transportation time and skipping the daily rush-hour means more time to focus on your work (or yourself). Working from a home office gives you back time you would otherwise spend on the road, train or bus.

Spending on Coffee, Lunch & Snacks

When people draw up a budget, one of the things that shock them about their spending habits is how much money they spend throughout the workday. If you add up all the cups of coffee/tea, snacks, lunch, a quick drink with colleagues after work and takeaways, it amounts to a tidy sum. We could all save money by bringing in food from home. But how many of us have the time in the mad morning dash as we’re getting ready for work?

As a home-based worker, you could save all this money. Fancy a coffee? Just boil the kettle. The fridge is close by if you want to rustle up a snack. As for the evening meal, you could use your 15-minute afternoon break to put on the soup to simmer or a casserole in the oven. No ordering a pizza because you’re too tired to cook after a full working day plus the commute.

Buying Work Clothes

It’s a cliché to imagine the home-based worker beavering away in their pyjamas, but it isn’t far wrong. Working from home instead of renting an office means that you don’t have to spend money every year on smart work clothes. Save this money for other things. After all, how many of us wear our work clothes outside of the office? You’d only need a few outfits if you have to meet clients.

Your Home Office Working Environment:

One of the disadvantages of working from home instead of renting an office is that you’ll have less space to set up the ideal working environment. For some self-employed people, a home office means losing a room in the house. For others, it entails trying to organise everything in the corner of the dining or living room. If everything’s been put in the wrong place or been tidied away (especially when you have a family), this can affect your productivity.

Distractions of a Home Office

Many business advisors recommend that people shouldn’t set up a business at home because of the possible distractions of partners/children, the TV, household chores, knocks on the front door, etc. It’s important to note that renting a separate office space comes with its own distractions as well. If your office is in a busier part of town, you also run the risk of getting sidetracked. Popping out for a quick coffee, chatting to the employees at the office next door or surfing the internet can all lower your productivity as well.

How much will these distractions affect your productivity? That depends on your mindset, self-discipline and ability to concentrate on the task at hand. If you know you’re easily put off your stride, then you may need to create a strict schedule for yourself to help you stay focused.

So, is it better to work from a home office or the office building?

In general, working from home works out significantly cheaper than renting an office. This is particularly beneficial when you’re just getting your business off the ground. It’s a great way to reduce your start-up costs and focus on building your business cash flow. If you need to meet clients, you can do this on neutral ground, or you could rent office space for the day.

The time to reconsider your decision is when your business is doing well, and you need to take on staff. Most home offices cannot accommodate multiple employees, and you may want a more professional atmosphere. When you start hiring employees, and you need to rent an office, you’re ready to take your business to the next level.