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Businesses The Almighty Buck

A Fair Telecommuting Budget? 38

Posted by Cliff from the dollars-and-sense dept.
homework asks: "Last night, I got a call from my boss asking me to define a budget for me to work from home. What items should I include in the figures so that I can show that the use of my home and my personal equipment can be compensated for fairly. Should I include my salary into the figures? Has any other Slashdot reader been in a similar situations and what was the outcome? Were you treated fairly?"
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A Fair Telecommuting Budget? More

A Fair Telecommuting Budget?

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  • Look to the IRS (Score:5, Interesting)

    by -dsr- ( 6188 ) on Saturday March 05, 2005 @07:23AM (#11851541) Homepage Journal
    The IRS defines what things constitute a home office for the purpose of deducting those expenses from your income tax. That's a pretty good guide. For instance, you'll discover that a space which you use 100% for business purposes is easier to account for than a space which you use 20/80 or 50/50... so look at setting a small room aside as your office. Divide your budget into capital costs and recurring costs.

    On the other hand, maybe all of that is overkill. Your actual cost of occasional telecommuting may be as simple as "enable an SSH and IPsec gateway on the corporate LAN, pay a monthly DSL/cable modem/frac-T1 fee".

    • Re:Look to the IRS (Score:2, Interesting)

      by Anonymous Coward
      If you use the IRS deduction for home office, when you sell your house, you'll owe capitol gains on that portion. If you're going to live there forever, great. If not, it's best to loose the deduction and reap the profit of your home appreciation.

    • Re:Look to the IRS (Score:4, Insightful)

      by thegrassyknowl ( 762218 ) on Saturday March 05, 2005 @09:01AM (#11851690)
      The IRS (or tax man for those who live in the real world and not the US) is probably the place to ask.

      I'd just go and pay a good accountant for an hour of their time and get them to help you out. They know what is and what isn't deductable as business-related expenses and can help with deciding on what to charge the company for the use of space within your home for their gain.

      There are very location specific taxation rules about how much space and what level of working from home you must do for it to be considered a legitimite business related expense. You'd have to include details for all that stuff.

      Budget for a new PC - something reasonably modern. Budget for a broadband internet connection - you'll need a decent bandwidth back to the office to be truly productive these days; even M$ Word files crank in at over a meg for simple documents.

      Don't forget to budget for high quality office furniture if you need it - a good, large desk and a VERY high quality and comfortable chair. You'll want a filing cabinet, stationary - some notebooks, pens, blank CDs, post-it notes, etc.

      Do you need a printer, scanner, photocopier, fax machine, extra phone line, mobile telephone, etc to do your job. Price them and include them if you do.

      Remember that all the computer equipment and lighting will use power. Work out roughly how much power (my power bill very literally doubles if I run my machine 24x7.

      There are lots of things - it comes down to what equipment you realy need to successfully perform your job. If they want a budget to set you up at home, then give them a detailed breakdown of costs involved. They'll tell you if it' too fat and you can trim it until they're happy with it.

      • Yes ask what you can do. However remember that just because you can doesn't mean you should! I know small business owners with a dedicated room for the business, dedicated computers. They don't write it off though, because when they sell they pay capital gains on that space, while the rest of the house is tax-free. (They are builders, they build their house for cost every 2 years)

        So ask what you can do, but also ask what the downside of doing it is. It might not be worth it. It might be worth pay

      • Re:Look to the IRS (Score:3, Insightful)

        by kent_eh ( 543303 )
        There are very location specific taxation rules

        Not only tax rules. Some jurisdictions require that if you are earning an income in your home, that you have to have a business licence/permit for that address. Which then causes the municipal government to ask: "Is this address zoned for non-residential purposes?"

        Of course, if you are telecommuting you can probably fly under their radar for ever, as long as you don't have co-workers or clients visiting.
    • I've done this on my taxes for the past couple of years. IIRC 21% of my last home was compromised of my home office. I took off 21% of my rent as a business expense. I had a lab of networking gear in that room that was on 24/7. I calculated that approximately 50% of my electrical bill was due to all the equipment. I spent on average 10 hours each business day in that room working. 50 hours out of a 168 hour week is about 30%. 30% of my environmental costs (read: AC/heat, water, sewer, trash) was wri

  • Ask your boss! (Score:3, Insightful)

    by OrangeSpyderMan ( 589635 ) on Saturday March 05, 2005 @07:37AM (#11851562)
    Should I include my salary into the figures?

    I really don't know why you're asking us that - ask your boss if he wants your salary in the numbers or not. Or better still, just use your initiative and give him the figure and explicitly state whether or not it includes your salary, based on $X K p.a.
    • It really depends on how expandable you are..

      I mean if you approach your boss regarding such a matter.. your job might end up being the next one outsourced to india...

      Just a paranoid thought :)

    • Re:Ask your boss! (Score:4, Insightful)

      by Glonoinha ( 587375 ) on Saturday March 05, 2005 @12:52PM (#11852900) Journal
      Better yet - ask yourself.

      Last company I was at said 'you can come in to work every day, or you can work from home every day provided you have the ability (ie, high speed internet, a phone, a quiet room with a door, a desk and space to put the laptop.'

      Pretty simple math there.

      If telecommuting is something you want to do, and if you already have all of the above (lets face it - anybody worthy of telecommuting already has high speed internet, etc) then make it real easy for your boss to say yes : tell him you want a telecommuting budget of $0.

      Honestly - how much do you really stand to make? $100 per month maybe? At $6 per workday lunch in the cafe you come out ahead. Add in commute time, wear and tear on the vehicle, gas costs, just getting an extra hour or two back in your day, and the benefit of working in your fuzzy bunny slippers ... it really works out in your favor.

      Otherwise put down a dollar figure you are happy with - say $200 a month to be 'fair' considering cablemodem, phone, 'office rent' for the bedroom you will convert to an office, fax line, etc. What could happen other than them saying yes or them saying no and making you continue driving in to the office each day to sit in your cube.
      • I wouldn't do it for free. It saves the company big time if an employee telecommutes. Think of all the various facility expenses involved in a physical structure for each and every employee. Cleaning expenses, office supplies, company computer(s), office space, insurance for another butt in a seat in a gievn building, etc. It costs companies big time to put a butt in a company-owned seat. I would, at the very least, itemize by percentage of office space your office takes for rent, 100% of 'Net access,
      • This might be opverlooking the ability to conect to the office. Do you need phone services forwarded? IF so is VoIP required or just forwarding your extention to the local phone. Do you conect your computer to an ipsec line over existing internet or dial directly into a server? Do you need a server set up to do this? Is someone else gogin to audit the security of the setup or set it up or can you do all that? how much time is involved with that and do you get paid for it?

        Unless it is already set up, i thi

  • Use your network! (Score:2, Informative)

    by Masarand ( 598211 )
    Fine someone else who is working frok home (preferably in the same organisation) and ask them what they got away with.

    Talk someone in finance (especially if it's a large company.) They will know the rules and will help you prepare something that will make a good impression on your boss.

  • What? (Score:5, Insightful)

    by Ratbert42 ( 452340 ) on Saturday March 05, 2005 @08:39AM (#11851658)
    I'd pay my company money to telecommute. Less gas, less wear and tear on the car, less lunches out, less clothing requirements, less stress from the commute (and office politics), ability to start cooking dinner early, etc. It'd save me $100/week easily.

    Our few guys that work offsite generally bill us for their cable/DSL and a phone, landline or cell, for about $100/month. We don't pay for home office space and we don't pay for mobile WiFi connections (except for the executives). We provide the laptop and other machines and they can expense a few things here and there, like a switch or router or KVM, but everyone can do that.

  • Simple (Score:4, Insightful)

    by miyako ( 632510 ) <miyako AT gmail DOT com> on Saturday March 05, 2005 @09:15AM (#11851733) Homepage Journal
    It's really pretty simple, just don't try to "get away with something". Try to keep work and home things seperate as much as possible, for example, try to have a single room as a dedicated office. Try to have 1 machine that's dedicated to work, etc. For things that are shared between business and home (cost of your net connection for example), try to figgure out what percent of the time it's used for work and use that percent of the cost.
    A lot of times it seems like people either try to cheat their company into paying for more stuff than they need to do their job, or for significantly better stuff than they need to do their job (if, say, you'll only be using SSH to talk to servers via command line, then there's no reason to try to get the company to pay for a bleeding edge machine when something a generation or two old will do just fine).
    On the other hand, a lot of people let themselves be screwed by just eating the costs of things like a desk and chair, or a router (for some reason everyone manages to get at least part of their internet bill paid).
    In the end, you probably won't get the company to pay for everything that you cite as a cost, but the difference might be made up wholly or partially just buy things like the money you save on commuting, the money you save on health care by not getting sick from stress from having to go into the office every day, etc.
    • I occasionally telework, and we aren't given any budget. We are expected to supply and maintain our own computer, desk, internet connection, phone line, etc. Of course, most people already have those things so no problem there. I don't understand why someone would need money from their employer to telework. In fact, as another poster pointed out, teleworking saves me money and time.
      • I have limited experience with this, I worked very briefly for a company (about 6 months) where I telecommuted, and when I first started I was expected to write up a budget for things like a computer, desk, chair, printer, stuff like that.
        I told my boss that I had a home office set up already with all the stuff I needed, but according to my boss, it was company policy. The explanation given was basically that any work I did had to be on a company computer, even it it was located at my house. Basically al
        • The explanation for the desk and stuff was a bit more vauge, but had something to do with red tape and ensuring that they were providing an acceptable work place environment (never made any sence to me, but hey, whatever).

          I'm going to guess that they have an insurance contract which covers injuries to employees while using company-owned equipment. Given that RSI is a major issue for office workers, they'd have wanted to be absolutely certain that you were covered, even if it meant paying for an extra des

  • This is easy (Score:5, Informative)

    by salesgeek ( 263995 ) on Saturday March 05, 2005 @09:51AM (#11851892) Homepage
    I've got a little experience with this having managed work from home salespeople for a while:

    Internet
    Find out the full cost of the highest speed internet you can get - include the phone line or minimum legal cable rate (that is different than basic cable usually by $15-$20 per month). Get it in writing or an email from the cable or DSL company.

    Phones
    The question here is home phone or cell phone. If your company provides cells, then this issue is dead. If your company doesn't then find out what the 1500 minute per month or better plans cost and submit that for your budget.

    If it's a home phone, Packet 8 and Vonage are great and give you business class features for $29-$39/month. Your boss will like unlimited long distance and the fact that you have real voice mail and the ability to handle multiple calls elegantly.

    Fax
    The question here is do you need to send them or just get them. If you are just getting them, your company's fax server or eFax is great. If you are sending, get a fax machine or multifunction device that can work without the computer being turned on.

    Supplies
    Ink cartridges are expensive. Figure out how much printing you will do and add 25% for crappy inkjet scammage (i.e cleaning mode & so on). Then calculate ink jet carts+$20/mo for supplies (pens, paper, etc...)

    Up Front.
    You might get $150 up front for furniture if you ask nice. You'll also need to buy a multifunction/fax machine ($150 for a good one), pay any set up fees for DSL/Cable, purchase a good router if you don't have one ($50).

    So here's the deal:
    <b>Up Front</b>
    Furniture $150
    MFC $150
    CABLE START $ 90
    Packet8 Phone $ 60
    <b>Total $450</b>

    <b>Monthly</b>
    Supplies $ 35
    Cable Internet$ 62 (this includes minimum legal cable)
    Packet 8 $ 35
    <b>total $132</b>
    • Supplies
      Ink cartridges are expensive. Figure out how much printing you will do and add 25% for crappy inkjet scammage (i.e cleaning mode & so on). Then calculate ink jet carts+$20/mo for supplies (pens, paper, etc...)

      Unless you need color printing, I see no reason to buy an inkjet printer. One can get a decent laserjet for $200, or even less if you find a sale. Your boss will appreciate the lower cost of supplies, and you'll definitely appreciate not having to run out and buy a new cartridge every mon
    • My answer to this question is always $0. It is worth it to me to eat this cost. But I've been doing this for a while, so the cost is about 0 at this point.

      You might get $150 up front for furniture if you ask nice...

      I won't argue as to whether or not that is true, but I'd say you'll need at least triple that to actually buy the furniture you'll need. Good chairs (that can be sat in for many hours/day) will easily be more than $200. Certainly I have yet to sit in a chair for $150 or less that I could
    • Your boss, I assume, will not accept a cable outage as an excuse.

      Your company's paying for it, so see if they'll pony up real money for a proper business level 24/7 connection. If not, point out the various problems with using a consumer level connection. You're going to be living on the net, so you'd better have that link locked down tight.

      I can't find pricing, but I can't imagine it would be more than $200/month, which I would think is well within the parameters for your company. If it's not, you can
      • If not, point out the various problems with using a consumer level connection. You're going to be living on the net, so you'd better have that link locked down tight.

        Speaking as one of those bosses, I'd laugh my ass off and say, "ummmmm... no" if someone tried to say they needed a fixed IP business grade high upstream cable connection for their home office. I would probably be concerned about what all they were going to spend company time playing with with that server bandwidth :)

        I can't find pricing,

  • Be reasonable (Score:2, Insightful)

    by Wespionage ( 751377 ) *
    There's definitely an advantage to telecommuting. I've been doing it for about three years now and it's worked out pretty well. When defining your expenses though, don't look to get compensated for every home expense that you can. In most cases, your boss will work out the cost of having you as an employee in the office versus having you work from home. At my office, there's a big advantage to having people telecommute, as the space is expensive and there are perks to being in the office (lunches, massages,
  • Ask your management how much it is costing on a per employee basis for office space, and then ask for some percentage of that amount. If they don't want to share that info with you, look it up in their publically available tax filings. Having knowledge of what they are spending to give you an office will give you a good idea of where to start negotiations.
  • Like most stuff - the price isn't just based on the supplier's cost - it's based on what the market will bear.

    Figure out how much it costs them for you to work in the office.
    Figure out how much it costs you to work from home minus how much it costs you to work in the office.

    cost is not just money - include time and other intangibles - e.g. no coworkers to chat with can be a minus or plus depending on you and your situation.

    If there's a nice value in between that makes both of you happy then you can have
  • One mistake a lot of small business make at first is to assume that telecommuters will use their personal home computers. Don't. It creates way too many conflicts when it comes to maintence responsibilities. The company should spring for a decent laptop (so you can bring it to the office when you need to be there) and it should remain their property.

    Other possible items:

    Seperate phone line or cell phone.

    Decent Fax machine

    Internet access, If they won't pay your entire DSL bill cosider upgrading to the
  • If you live in the Southbay, more specifically around Torrance, Redondo or Manhattan Beach, there is an accounting firm called Andrade & Associates. I have been having all my work done by this firm for the past few years and they are always on the ball. They tend to lean a bit more conservative as far as paying out taxes is concerned, however I prefere that to an accountant that will get me everything he /she possibly can and risk having an audit. Good luck.
  • Ask your boss for a computer to keep things seperate, (they provide software, maint. etc) and Approx $500 for Setup. Desk, Office supplies, a separate phone line from yours. and to pay for the internet connection. Keep everything simple.

    I used to work for a major bank and they did that with me. They brought over a desktop, Printer, and had they IT guys come over and set up a network so we could share the cable connection and then locked the computer (like the office) where I couldn't change anything on i
  • ...a computer! Also, while the basics (Internet, Phone, Print Supplies, Fax, etc) should obviously be included, so should the percentage of rent/mortgage for the space you use as an office. I would probably include an umbrella insurance policy since I assume workplace insurance policies do not apply to telecommuting.
  • My ex-wife had an office in the front of our house for two years. Our electric bills jumped more than I thought they would from increased electricity. In Florida, most people turn the air conditioning to a warmer temp during the day to save money. With her home all day, the a/c was on, as well as the tv and stereo. Make sure you factor in increased utilities to the equation. Plus, if I recall correctly, the IRS won't give you a deduction for home office unless its 100% used for work. If that's the case, you
  • A few things to keep in mind.
    • Increased hydro usage for the machine.
    • A locked filing cabinet for company materials.
    • A second phone line for conference calls.
    • If you have DSL/Cable a router with a firewall.
    • VPN software to connect to your office securely.
    • Paper, pens, printer cartridges.

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