Running a Business From Home in Central Texas

A business run from home comes with more than a tax question. Whether a space counts for the home office deduction, and how any amount would be figured, are IRS rules that turn on the facts of your home and your work, so this guide does not decide them. What it covers is the rest of running a business from home in Central Texas: the records to keep, the insurance questions to ask, and the local rules worth checking before customers come to the door.

Moreno Financial Services prepares returns for self-employed people and home-based businesses from Kempner, and our monthly bookkeeping keeps a business's records current all year. Plans start at $600/mo, and the scope is settled before any work starts.

Where the IRS covers business use of a home

The IRS covers business use of a home in three places, all listed under Official sources below: a tax topic page with the overview, a full publication on business use of your home, and a separate page on the simplified option. One trap to avoid: an older IRS home office page still turns up in searches and is now marked as a historical document that may not reflect current law, so start with the tax topic page instead. Bring what you find there to the free call rather than deciding it alone.

Records for the equipment you use

The IRS describes business assets as property, such as machinery and furniture, that you own and use in your business, and its page on what kind of records to keep, listed below, sets out the documents it expects for them.

For a home business, that means a file for the desk, computer, printer, tools or other equipment the business bought, with the receipt and a note of when it was bought and what for. The Taxpayer Advocate Service also suggests keeping a log of valuables and business equipment, so you can keep track of their value if something is lost. In a recent disaster-preparedness reminder, the IRS suggested scanning paper records and saving electronic copies on a secure device or in the cloud, so keep a scanned copy of the log and its receipts on a secure device or in the cloud.

An equipment log

A simple log kept alongside the receipts covers most of what those sources describe:

• What the item is, with its make and model
• When and where it was bought, and what it cost
• How it was paid for, with the receipt or statement line
• What the business uses it for
• A photo of the item and its serial number

Insurance a home policy may not cover

The Texas Department of Insurance warns that a home policy may not cover all the equipment a home business relies on, or injuries to employees and customers, and says that unless the business is just you and your laptop, a typical home policy won't be enough. Most home policies also only pay a certain amount when electronics are stolen or damaged by fires or storms, which matters when the business's computers live in the house.

TDI names other coverage a home business may need to ask about: business interruption coverage, which pays for lost income if the business is damaged by events the policy covers; data breach or cyber liability coverage if you store customers' personal information; and auto coverage for business driving, since personal auto insurance probably won't cover accidents while driving for the business. TDI's Help Line, 800-252-3439, takes insurance questions.

Local rules worth checking

Cities set their own rules for businesses run from a home, and a lease or homeowners association may add rules of its own. In Killeen, the city's Planning division lists Chapter 31, Zoning, among its code references, takes general questions at 254-501-7631 or planning@killeentexas.gov, and takes planning and zoning applications online through MGO Connect. Outside Killeen, ask your own city hall or county office, and read your lease or association rules before you invite customers to the house or park work vehicles out front.

The property papers behind a home business

Whether you own or rent, keep the papers for the home itself with the business records: the deed or lease, the closing statement if you bought, and receipts for improvements. If any of those are missing, our guide to storing tax records and getting copies covers where recorded property documents can be found in Bell and Lampasas counties.

Questions to bring to the free call

How working from home plays out on your return depends on facts a web page cannot see, so bring the question to a free 15-minute call and we will tell you honestly whether we can help. Have last year's return, your equipment log, and the lease or closing statement for the home with you. If you are also new to working for yourself, our guide to a first year of self-employment covers the setup steps that come before any of this.