ABA Family Legal Guide

Forming and Operating a Small Business

Starting a Business

Working from Home

What are the tax implications of running a business from home?

The good news first. You can deduct many of the expenses of your home office if you satisfy Internal Revenue Service (IRS) requirements. (And you can deduct other business expenses such as business supplies and equipment just as if you had a business not based in the home.)

The bad news? Satisfying the IRS is not easy. After all, almost everyone has a home, and it is tempting to create a little home business (at least on your tax forms) that would enable you to save on taxes. You might want to consult a lawyer or an accountant before deciding to operate your business from your home to be sure that you will meet all the requirements and the deduction will be upheld, even if challenged by the IRS.