The pros and cons of a home-based business


Are you thinking of operating your business from home? Deciding to use a part of your living space for work is not something Australians are unfamiliar with. If you want to join the many who are operating their businesses from home, you first need to make sure that you know what you’re getting into.

We’ll give you a head start by listing down a few of the many advantages and disadvantages of operating a business at home.


Reduced expenses

The most notable benefit of a home-based business is that operating one costs significantly less than operating at an office or commercial space. First, since you’re using your own living space as your business location, you won’t have to pay for office rent. Second, because it’s the resources in your home--power supply, internet connection, facilities and parking space, to name a few--that you are using, your bills will be significantly lower because you’re not paying for two separate utility bills. You also won’t have to worry about spending money on transportation and parking.

No travel time

In many urbanised areas in Australia, particularly in and around the country’s central business districts (CBDs), traffic can become congested, especially during peak times. Being stuck in traffic could result in hours wasted, meetings delayed, transportation resources spent and opportunities missed. For owners of home-based businesses, however, this is not a problem.

Tax benefits

In Australia, home-based businesses can claim certain expenses as tax deductions. These include a certain percentage of mortgage or rent, a portion of utilities used as part of operations such as water and electricity, costs incurred when using the telephone for calls related to the business, and the depreciation of the value of computers, chairs and desks used as part of the operations.


Personal and business expenses can mix

Because the same resources are used for both home and work-related purposes, it’s easy to mix business expenses with personal expenses when operating a home-based business. For example, to claim tax deductions, all claims for eligible expenses must be properly apportioned. Because of this, it can be difficult to prove how much of the resource is for personal use and how much is for business use.

You are easily distracted

Working at home means it’s easier to become distracted. Distractions may be in the form of family members, easy access to food and the television open in the background. Distractions can make it harder for you to focus on your work, which means less productivity and less tasks completed.

There are restrictions

Operating a business at home entails a number of restrictions. For example, the business is not allowed to display its goods on windows and around the house. Also, only one worker who is not a resident of the home is allowed on the premises. There are also limitations on the amount of space that you can allocate as your office.

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