Running a business out of your own home offers distinct advantages. As TheBizEx explains, this allows you to claim unique tax deductions, reduce overhead costs, and scale up rapidly. However, sometimes the need to scale up a home-based business can result in logistical hurdles—like a lack of space.
If your current home office can no longer comfortably accommodate your business operations, it's time to make a change. This guide from Coletividad lays out your options.
Upgrade to a larger house
If there is simply no way to secure more space in your existing house, consider upgrading to a larger property. Consult a real estate professional for help. A savvy realtor will know your local market and can advise on what neighborhoods suit your needs. Plus, realtors are skilled negotiators, ensuring you get the best deal.
Before consulting a realtor, it's good to have a price point in mind. Get an idea of what you can expect to spend based on the geographic area. You can search average house prices based on neighborhood, get historical data about pricing, and see how much activity there is in the market.
Once you have an idea of housing prices, you can figure out your finances. Unless you have a significant amount of cash, you will need to budget for a down payment to take out a home loan. Some people follow the 20% "rule," making a down payment worth 20% of the home price. However, you can make down payments as low as zero percent.
Renovate your home
If you can't afford a new house or simply don't want to move, you might consider remodeling your current property instead. This allows you to take advantage of unused space, converting it into usable work or storage space for your business. For example, a guest room, garage, attic, or basement might be worth renovating.
Note that some home improvements made for business purposes may be eligible for tax deductions. Rocket Mortgage explains that in order to qualify, the space you are renovating must be used exclusively for work purposes. Make sure to save any receipts from your remodeling project so that you can claim these expenses when tax season arrives.
Claiming such deductions is easier if your business is a recognized legal entity. If you haven't already, register your home-based business with your state. A structure like a limited liability company can help protect your personal liability and provide tax perks. Register your LLC with the help of a provider like ZenBusiness to avoid pricey legal fees and expedite the process.
Redesign your existing office
Finally, if you want to take the most cost-efficient route, you can simply redesign your existing home office to create more space for your growing business. Start by upgrading your furniture. Your desk is one oversized item that you may want to swap out for a space-saving model. Wall-mounted shelving and rolling filing cabinets can also save space.
Note that the design of the office can also impact the size. For example, lighter colors tend to make rooms look larger. Use hidden storage to eliminate clutter, which can make a compact space feel cramped. Finally, utilize rugs to define different areas of your home office—such as the workspace versus an area where you entertain clients.
Whether you redesign, remodel or buy a new house altogether, there are many ways to accommodate a growing business. Take the time to weigh the pros and cons of each option to figure out which one is best for you.