J.K. Lasser's Guide to Self-Employment, 2nd Edition

CHAPTER 6 Deducting Office-Related Costs

1. Rental Expenses
2. Home Office Use
3. Materials and Supplies
4. Furniture and Fixtures
5. Computer-Related Costs
6. Insurance
7. Utilities
8. Miscellaneous Office-Related Costs
9. What's Ahead

Everyone has to be somewhere, according to a line from an old BBC show. Whether you work in an office building, at a strip mall, at a table in Starbucks, or in your home, you have office-related costs. These costs include expenses related to the physical space, such as rent for an office within a commercial building or a home office deduction if you operate from home. Office costs also include supplies, technology costs for a website and computer backup and maintenance, utilities, and insurance. You may have some or all of these expenses.

Rental Expenses

Whether your office is a retail store, a greenhouse, an artist's studio, a medical office, or an office in a commercial building, it has to work well for you. Check on:

• Location. Does access to foot traffic matter to you? Do you need adequate parking or access to public transportation?
• Size. Is the size of the space suitable for your needs?
• Cost. Rent is usually one of the largest monthly costs for a self-employed person. Can you afford it?

Your monthly rent for commercial space is fully tax deductible. Rent can be a fixed monthly amount or an amount based on a percentage of your gross receipts.

The rent must be reasonable, which is assumed when you and the landlord are not related. However, if the landlord is your ...