Do You Need a Home Office Lease?
If a business owner operates out of a home office, he or she may be able to take the home office deduction in order to reduce federal tax liability. In addition, two options are available to help maintain the separation between the business owner and the business entity: (1) a home office lease, under which the company pays rent to the business owner for the use of his or her home office, and (2) an accountable plan for employee business expense reimbursement, under which the company pays the business owner, as its employee, the costs of a home office. As with every choice we make, each options has its own set of advantages and disadvantages to consider. A business owner considering these options should consult with an attorney to determine which option is best and to learn the rules and best practices needed to follow to take advantage of such option.