If you’re a small business owner who also happens to be considering purchasing a home, it could be a win-win. Not only will you have a place to call your own but you’ll have a brand new workspace. In fact, owning a home can be a tactical business moves in several ways. Here we’ve broken down the benefits of owning a home if you’re a small business owner.
But before we do that, we have to cover the challenges that you’ll need to overcome to get there (and how to do so):
Qualifying for a loan as a self-employed individual.
How to overcome this challenge: While traditional mortgages typically require proof of income using W2s, Non-QM loans are better suited for small business owners and freelancers because they allow you to qualify with other methods of income like bank statements.
Saving up for a down payment.
How to overcome this challenge: Starting and running your own business can be expensive so it might seem impossible to save for the down payment on a house. This is where careful budgeting and management of business expenses will come in handy—using a budgeting app is a cost-effective way to start saving. It’s also probably a good idea to separate your business and personal accounts.
Growing your business.
How to overcome this challenge: If you’re running your business out of your home, you might be worried that it will limit your growth. However, there are ways to get around this problem including hiring remote workers and renting a storage space (or even purchasing a storage shed) to hold inventory.
Now that we’ve done our due diligence in helping you prepare for this big decision, let’s dive into the advantages of owning a home as a small business owner:
No Need to Rent an Office
As you likely know, renting office space can be difficult and expensive, especially if you live in a metropolitan or up-and-coming area. And, honestly, renting an office probably isn’t worth it if it’s just you. However, if you own a home, you can invest in creating a workspace, instead of paying rent. While you’ll still be paying a mortgage, you won’t be paying double rent for your residence and your office which should save you quite a bit.
When you’re looking for a home, make sure that you consider the space requirements for running your business from home. Do you need an entire room dedicated to your work, or can you get away with carving out a little section of the living room or spare bedroom? You should also think about inventory storage.
Eliminate Your Commute
One of the worst parts of any worker’s day is making the trek to and from work. But, if you work from home, you eliminate your commute, plain and simple. Not only will it save you headaches and wasted hours on the freeway but it will save you money, too. From gas to putting unwanted mileage on your car, removing your commute from the equation allows you to invest more back into your business.
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Get a Tax Break
Did you know that home office expenses, property taxes, and mortgage interest are all tax deductible? If you itemize your deductions you could get some of your investment back. Getting a break on your business taxes is a big deal because this money can then be put back into your operations, and so on.
Fortunately, with the boom in e-commerce and online business tools, running a business from home is more manageable (and cost-effective) than ever. Owning your own house is just the next step in making smart financial decisions that can help you focus on the most important aspects of your business. Just make sure you go about the process in a way that won’t jeopardize the stability of your business. It may take some careful planning, but in the end it can pay off in a major way, including helping take your business to the next level.
Keep in mind that only you can decide if and when buying a home as a business owner is the right move for you.