The whole world was hit by the Covid-19 pandemic in 2020. This forced many companies to adapt to new working methods. Companies opted to work remotely or from home. This is reduced the chances of people contracting the Covid-19 virus at the workplace. Working remotely simply means employees working from somewhere else other than the office. When working remotely, an employee can work from home, from a café, in a shared office, or in any other space.
Working remotely or working from home has proved to be effective. Many companies have remained working remotely even after the reduction of worldwide restrictions. Some of the benefits of working remotely include:
- Higher productivity: employees are more productive while working from home. This is because employees have more time compared to when they did while working from the office. Employees spend less time commuting from their homes to the office and use that time working.
- Work-life balance: the employees who work remotely have been able to make a balance. Employees set time to work and to have a social life. Employees have the time to enjoy some time off.
- Flexibility: while working remotely, employees can be flexible. Companies have different shifts that suit the employees. The employees get to choose when to work and can work from anywhere.
- Cost reduction: with many companies working remotely or from home, there is a lot of money being saved. Companies save money because the employees do not use the company’s assets. Water, electricity, and rent are not used when not in the office.
As a business owner, someone can opt to work from home instead of from the office or a business premises. There are expenses you can claim as a business owner working from home. All businesses and companies have expenses. An expense is money a business or company incurs while operating. Companies and businesses have many expenses. Expenses are also called deductions. They can include:
- Advertising and marketing expenses: businesses and companies incur advertising and marketing expenses. For a business or a company to get customers, it needs to be advertised. All the monies that go into advertising and marketing a business or company are expenses to the business. Different types of marketing and advertising cost different amounts.
- Registered: all companies and businesses need to be registered. Business and company owners need to visit their local government to know what is required to run the business or company. The money the business pays to acquire licenses is an expense to the business.
- Office supplies: a business or company will need supplies. Different types of businesses and companies require different equipment. If working from the office, a company might need working desks, water dispensers, fans, and heaters. Any supply or equipment a business or company buys goes to the expenses.
- Wages: companies and businesses have employees. The employees in companies and businesses need to be paid some salary at the agreed time. These wages fall into the company’s or business’s expenses.
- Insurance: all businesses and companies should get insurance. The insurance should be against risks that might occur. Such risks can include natural calamities, theft, fire, work accidents, and more.
- Pieces of training: in some businesses and companies, the staff need to undergo some pieces of training to improve their skills. The business or company will pay for any training conducted. This will be deducted from the expenses incurred.
- Maintenance and repair: it is good for businesses and companies to have well-working equipment. It is the company’s or business’s responsibility to make sure all the equipment is well maintained. Any payments made towards the repair and maintenance of office equipment count as expenses.
- Taxes: companies and businesses need to pay taxes to the government. All the taxes paid to the government count as expenses to the business.
- Loan payment: if a business or a company has a loan from a financial institution, it will be required to pay off the loan. Payment will be done depending on the agreement made between the financial institution and the business or company. The money a business or company pays to the financial institution will be an expense.
While working from home, some expenses are allowable. Allowable expenses are those that an employee or a business owner working from home can claim. The claimed expenses can be deducted from your tax. While working from home, an employee will need these 3 main items.
- The right equipment: for someone to work from home, he or she needs to have a laptop or computer. An employee also needs to have a working keyboard and mouse. If one uses a desktop, he or she needs to have a monitor.
- Good reliable internet connection: This is one of the most important items for anyone working from home. Having a stable internet connection will help an employee to work effectively. An employee should do due diligence before deciding on the right internet provider.
- Right furniture: for an employee to work well from home, he or she should have appropriate furniture. This includes desks, chairs, and tables. Good posture is important while working from home.
Once an employee has the 3 main items, he or she can be able to work well from home. While working from home, one is bound to have some expenses. Some of the expenses can be claimed while one is paying tax and eventually deducted. These expenses include:
Repairs and maintenance
While working from home, rent and maintenance are expenses one can claim. If a business owner is conducting his or her business from home that becomes his or her office. This means that one has to make sure all the business-related equipment is well maintained. For example, if one starts a food catering business, he or she should make sure the cookers and ovens are well maintained.
If anything that is business-related needs a repair, the repair will be done at the expense of the business. Any damaged property at home that is being used by the business can be repaired at the expense of the business. While working from home, a business owner can claim the expenses that the business has incurred while conducting repairs and maintenances.
Working from home means that you will use the home’s electricity to work. If an employee is working from home, he or she can claim any electricity expenses used during the working from the home period.
A business owner who uses the electricity provided at home can also claim the electricity bill as it is an expense to the business. A business owner will use electricity at home to run his or her business. This will make the electricity bills at home to be high. The business owner can claim the electricity bill because it is an expense to the business. The electricity also helps the business to run.
Telephone and internet
While working from home, the internet is one of the most important things needed. This is because if one has unstable and bad internet, no work will be done. Communication is essential when it comes to working from home. Employers expect any employee working from home to deliver quality work while working from home. An employee or business owner working from home needs to have a reliable and stable internet connection. Before opting to work from home, one should consider the different options he or she has with the different internet service providers and choose the best.
It is essential to have a business telephone number. Your potential and current customers will contact you using the telephone. If you are using your home telephone line to conduct business, all the telephone bills should be directed to the business’s expenses.
If any telephone and internet expenses are business-related, you can claim them if you are working from home. The expenses incurred will be deducted from your taxes.
Office or business equipment
When you decide to work from home, you need to have the right equipment. If a company allows its employees to work from home, it should make sure the employees have the right equipment.
An employee will need things like a keyboard, mouse, printers, computers, photocopy machine and many more. If an employee buys this equipment, he or she will enter into expenses. The employee can claim these items when working from home. The claim will however only be valid if the equipment is used for the employee’s work while working from home.
A business might need equipment for it to run. If a business owner is working from the comfort of their home, they can claim the expenses incurred while purchasing the business items.
Rent and mortgage
Some people rent out their homes to others who want to work from home. If you rent out the portion of your house, you can claim the rent you get as an expense.
A business owner can also decide to make one of the rooms in their home an office. If you were paying a mortgage for your house, you can claim a portion of the mortgage or rent you are paying. You are allowed by law to claim a portion of the interest you pay for your mortgage.
Car or vehicle
Most businesses own vehicles. Vehicles come in handy when a business owner needs to deliver goods or needs to move to offer a service. If an employer uses the vehicle to fulfill the company’s needs and conducts business, he or she is eligible to claim any expenses incurred by the vehicle.
A business owner might have a personal car. If the car is used to conduct any business, he or she can claim any expenses from the car. The expenses from the vehicle can include fuel charges and vehicle repair services.
We all need a tidy place to work in. If one is working from home, he or she needs to make sure the home is clean. Most business owners use their homes as offices. Employees who have opted to work from home also need to ensure their working surfaces and offices are clean. A clean environment will lead to a better quality of work because there are fewer distractions.
If working from home, you can claim any home cleaning expenses that will be incurred. This can include hiring cleaners to clean your working areas. While working from home, one might decide to buy some cleaning essentials like soap, sprays, wipes, brooms, cleaning gloves, and brushes to tidy up their working area. All work at home expenses incurred in buying cleaning equipment can be claimed. This is because the equipment is being used by the business.
While working from home, a business cannot claim some expenses. If the equipment bought or the damages caused are not related to the business they cannot be claimed. Some the things that a business cannot claim include:
- Room decorations: Room decorations do not add any value to the business. A business cannot claim any decoration expenses that do not bring profit.
- Home furniture: while working from home, if the furniture is purchased and is not being used by an employee while working or the business, it cannot be claimed.
- Home internet: internet expenses are claimed if an employee is working from home or for business transactions using the internet.
While working from home, an employee or a business owner should take advantage of the claims available. This will help anyone working from home to reduce the tax burden. Make claims for business expenses as early as possible. While running the business, record the expenses you are incurring every day. Always keep any receipts given to the business. This will help a business owner to have visibility of the expenses incurred. If not sure of the expenses you can claim, always reach out for help. As a business owner, you will be surprised at the expenses you can claim while working from home.