Renting an office vs. Working from home

Working from a home office

Working from home has become more and more popular, especially in light of the COVID-19 pandemic. Many workers, such as freelancers and contractors, often already work from home office spaces. For people that have spent many years tied to an office environment, the flexibility as a remote worker may be appealing. One study even showed a 22% performance boost among employees once they began to work from home. The main advantages of working from a home office include:

• No commute
• Improved work/life balance
• Flexibility
• Reduced office-related expenses

Renting an office space

While working from a home office has its obvious appeal and popularity, it doesn’t negate the value of renting an office. Many employers, entrepreneurs and business owners feel the need to work in an office and have regular in-person interactions with employees and clients. Renting an office space has its own benefits, such as:

• Structured work environment
• Improved employee and client interactions
• Performance accountability

Related: Going Remote: Transitioning Your Team to Telecommuting

Factors to consider

Both working from home and renting an office have their advantages, but there are many factors to consider before deciding which option best suits your business. Take the following into account when planning for both the current and future needs of your business.

Commute

One of the biggest appeals of working from home is the lack of commute time. The average commute in the United States is about 26 minutes, which may vary depending on whether you or your employees travel by personal vehicle or public transportation. By working from home, you and your employees can gain almost an extra hour in your day to spend working, doing other tasks or simply relaxing. You’ll also save on personal fuel expenses by not driving to work every day.

However, some people may find that the commute to work is important for processing the beginning and end of their workday. They may enjoy traveling into downtown or business areas, as well as the nearby amenities. If you’re renting an office space, it should be a space worth commuting to.

Rent and other expenses

Many businesses, entrepreneurs and freelancers have moved their operations to home to reduce the overhead cost of an office. This is especially valuable for new businesses or those that experience fluctuating demand, since their lower revenue may not be able to pay for expensive office spaces. New business owners often have debt from loans and creditors, but starting from a home office can help reduce upfront new business costs and allow for better debt repayment. If you have remote employees, however, you may need to compensate them for costs to equip their own home office, such as computers or phones.

If you operate from an office, you’re looking at more business expenses than just rent. You’ll also have to pay for utilities like electricity and internet, as well as quality furnishings and equipment. To make an office attractive for employees who may otherwise prefer to work from home, you’ll need to make sure it’s stocked with perks and amenities. Some business complexes provide access to gyms, cafeterias and other amenities to its occupants, but they can come at an extra cost or higher rental rates.

Taxes

If you’re a business owner working from home, you may be able to deduct home office costs from your taxes. This benefit is often for self-employed workers such as freelancers or entrepreneurs using a portion of their home as their exclusive and principal place of business. The deduction amount you’re eligible for can vary depending on square footage or overall cost, with either a simplified or regular method of calculating deduction amounts. Alternatively, business owners who rent an office can deduct rental costs as a business expense.

Work environment and culture

If you’re running your business from home, you’ll need to consider the kind of environment you’ll be working in. If you work in a small or shared space, you may need to set boundaries about working hours. Some people need separate rooms to create boundaries, which means that you may spend more on personal housing costs to get additional space. It can be even more complicated if you have a family. While spending more time with family is a perk for many, it can be harder to create a quiet space to focus in if you have kids and/or pets around. Some people concentrate better when they’re able to separate work and life by physically attending to an office.

Isolation is one of the major downsides to working from home. While video meetings and phone calls let you interact with employees and clients, many find that a physical office space leads to a more collaborative work experience. This is especially true for extroverted individuals who find fulfillment in socializing and interacting with others through work.

Coworking spaces are a good alternative for business owners that choose to operate remotely. For a fee, they provide temporary spaces for individuals and businesses to work from. This imitates a traditional office setting without the financial obligations of renting a space. A coworking space can allow you and your employees to interact face-to-face, building connections that may be otherwise lost when interacting only virtually.

Read more: Virtual Team Building Activities for Remote Teams

Professionalism

Your work environment can also affect your company’s perceived level of professionalism. If you need to meet with clients or other connections, meeting in your home office can be too intimate and may not give the same professional appearance as a separate office. Exclusively virtual meetings may also inhibit your ability to build professional relationships over time.

A physical business location may appear more professional as it can show that you have the means to rent and sustain your own space. You can also design and decorate your office to match the image of your business, creating a stronger brand identity among employees and clients.

Dress code

Many remote workers enjoy more casual dress codes, especially those that don’t have to appear in more professional attire for virtual meetings. While this can mean that your work clothes are more comfortable and low-maintenance, some people feel less productive when they’re dressed to relax. To counteract this feeling, they’ll make an effort to dress professionally even when working from home.

If you and your employees are working from an office, you’ll be more inclined to adhere to a dress code. This can be motivating and improve productivity, but that also means you may need to design an office dress code policy.

Flexibility

Freelancers and contractors that work from home enjoy flexible hours and lifestyles. While some businesses may still operate on the usual daytime schedule, many are able to function with looser hours. For you and your employees, that means you can take breaks throughout the day for non-work activities and can work when it suits you best.

The flexibility granted by home offices can improve work/life balance as well. If you’re a parent, you can take breaks throughout your workday to spend time with family. You can also swap regular office hours to take advantage of valuable daytime hours outside, whether it’s for exercise or to get a breath of fresh air.

The downside is that lack of structure without accountability can lead to reduced productivity. A formal office may have more restrictive hours than a home office space, but provides a structure that promotes productivity. Even so, you can set office hours as an employer to meet your needs and those of your business.

Related: How to Create a Remote Work Policy (With Template)

Business needs and growth

Keep in mind the current and future needs of your business. If your business is entirely remote from the beginning, will it continue as such? Depending on the types of goods or services you offer, you may need to expand your home office space beyond the capabilities of where you live. Likewise, you may need to consider additional space later on if you’re renting an office or moving certain operations to remote or outsourced options.

Finally, the needs of your company may not be compatible with remote work. If your business centers around digital work and already requires virtual communication, then working from home may be ideal. If your business requires more in-person tasks, it might make sense to rent an office or implement partial-remote policies.