Are you searching for a new workspace or transitioning careers? If your vision even involves something like a rented office space cubicle, you will need insurance.
Every business owner needs some guidance when first getting started or beginning to expand their services. You will need insurance if you use your car as an office or simply need a working space to create your product.
What qualifies as a business office for taxes and insurance?
If the home is where the heart rests, then your office should be where your mind dances. No matter how good you are, your workspace should provide security for your business and financial stability, and that cannot happen without the proper insurance.
The COVID-19 pandemic took a lot of people away from their work.
All over the globe, people lost jobs and businesses they had been in for years. To make up for lost wages or as a way to work while social distancing, more people turned to their cars.
Utilizing your vehicle as a way to make money, begin freelancing, or maintain a business turns your car into a business asset. If you were to lose your vehicle for any reason or length of time, it would have a severe impact on your operation.
How to properly file taxes and what additional insurance coverage is needed once you begin operating are crucial things to consider when expanding your business.
According to the Internal Revenue Service (IRS), anyone who owns a business or is self-employed and uses their vehicle for business can deduct car expenses on their tax return.
If you use your car as an office for a driver’s service or even attend meetings with clients, it is crucial to keep track of your usage for tax deductions. Vehicle tax deductions are based on two methods.
When figuring your car’s annual tax deduction, you will either use the actual expense or standard mileage rate. The IRS considers the cost per mile business owners spend to service their clients and gives mobile-dependent businesses a tax deduction. The standard mileage rate gives back a set amount, currently 56 cents per professional miles driven.
What insurance do I need if I use my car for work?
If your vehicle is used for business and leisure purposes, using actual expenses might be the easier route. You should consider filing your car’s actual expenses if your business affects or depends on any of the following:
- Depreciation value from driving
- Gas and oil changes
- Insurance coverage costs
- Lease payments or loan repayments
- Repairs and tune-ups
- State registration fees
- Tire maintenance
There are three kinds of car insurance coverage entrepreneurs and freelancers tend to use. Depending on your professional and personal needs, you can discuss which business class coverage will give you the best coverage for your needs.
Class 1: Basic Needs Coverage
Class 1 insurance will help cover driving between multiple places for occasional travel to meet clients or varying work sites. Typically, this would include positions like agents, in-home nurses, groomers, or artists.
Class 2: Insuring Extra Hands
If you are running your business but find yourself needing extra hands such as an apprentice or assistant, Class 2 will offer additional coverage. Class 2 coverage will include many elements of Class 1 but will extend coverage to another driver.
Class 2 won’t cover high mileage travel but will be helpful to any kind of business owner that outsources help and wants to include an employee or partner on insurance.
Class 3: Hitting the Pavement Coverage
If you are a freelancer or salesman, a high-mileage insurance plan will be what you need. This is the most expensive option, but it is because those with long-distance and frequent travel requirements are seen as a greater liability.
Commercial Insurance for Car and Office
Commercial insurance may be what you need if none of the classes offer enough coverage or if you operate as a sole proprietor. Classes 1, 2, and 3 will not provide enough protection required to cover traditional commercial vehicles for contractors and freelance drivers like instructors, rideshare, or delivery drivers.
A list of bonuses having commercial auto insurance includes:
- Auto theft
- Assistance for property damage
- Coverage for legal costs
- Coverage for medical payments
- Protection for forms of vandalism
What is important when renting office premises?
Getting a physical office where clients can come, having a workroom, or finding a place to separate your business from home is a milestone. Your office is much more than a well-decorated or organized space and can be the best thing to help your business or your worst mistake.
Even if you’re not opening a storefront to sell a product, there are common mistakes new entrepreneurs make when picking where or how their office should be.
Where You Are Matters
Even if you seldomly have clients visit you at your office, you want a welcoming space. When searching for office space, external factors matter just as much as inside potential. Parking, traffic levels, and even nearby restaurants could affect the growth of your business.
Bonus insurance tip: Before signing a lease, ask your auto insurance company if your business’s new location will increase your premium. A change in ZIP code can drastically affect your rates for business and auto coverage.
Leave Room to Grow
Reaching the level of needing your own commercial space or office is exciting, but don’t let your current success limit your future. What are your long-term goals, and are you going to hire more help?
These questions can be overlooked in transition and leave many beginner entrepreneurs at risk for violations or worse. Before going to look at any space, your realtor should know precisely how much space each employee needs to work comfortably and what state laws are relevant to your business.
Spaces Conducive for Company Culture
Sometimes you have to go with your gut. What kind of business culture do you want to create?
When finding a new office space, consider both the community surrounding your location and the building structure. Are there amenities in your building that could add value to your office, and will they require additional insurance coverage?
How to Choose an Office Location
Whether you are driving, renting, or becoming an owner of a new property, you want to ensure that you are taking the proper steps to grow your business. Although decorating your dream workspace is essential, picking an affordable place is more than the price tag.
Being a business owner and boss opens a new realm of responsibility and makes you liable for your clients and subordinates, so you need all the support you can get.
Knowing how to take advantage of each step as you reach your career goals will have smoother transitions as you expand. Utilizing insurance as a business growth tool will not only protect what you have but can help you get to where you want to be.
Danielle Beck-Hunter writes and researches for the auto insurance comparison site, 4AutoInsuranceQuote.com. Danielle has been a freelancer and business owner in the greater Atlanta area for three years.