Business Activity in the Home
• About one in four (22%) employing businesses is principally located in the home or an associated structure and another 25 percent have a home office in their residence.
• Home-based businesses overwhelmingly employ fewer than 10 people. The principal location for 27 percent of businesses employing fewer than 10 is the home compared to 4 percent for those employing 20 or more.
• There is no age difference between those located primarily in the home and those located elsewhere. However, home based businesses are more likely to be in construction, agricultural services, transportation and administrative support services. They are less likely to be in retail, hospitality, and personal services.
• Home-based businesses appear to blend into their neighborhoods remarkably well. Half (52%) have no employees (other than members of the household) who spend a majority of their time working at the home location of the business and another 30 percent have only one. Three of four do not have customers or vendors routinely visit them. Over the last three years, 96 percent report no complaint from neighbors about problems they think the business caused.
• Home-based businesses typically use a limited amount of space, a median of 250 square feet and 80 percent with just one or two rooms constituting the entire business premises.
• Zoning or other regulations do not appear to be a problem of any consequence for those currently operating their business out of the home. This excludes potential small business owners who may have been impeded from starting by zoning and other regulations.
• Fewer than half (46%) take the portion of their home used for business purposes as a deduction from their federal income tax, the most frequently cited reason for doing so being that the deduction is too complicated to make it worthwhile.
• Even though the primary location of their business is outside the home, small business owners with a home office typically use it every day (54%). Another 36 percent use it a few times a week.
• Home offices are small, usually a single room (92%) with a median of about 175 square feet of space. Ninety-one (91) percent have business equipment, such as a desktop computer, fax, or copier, located there.
• Home offices are private. Employees, customers or vendors routinely enter them in just 4 percent of cases. In 28 percent of cases, those offices occasionally serve as an extra bedroom, play room or personal activity room of some nature.
• Just 26 percent deduct their home office from their federal income taxes. The primary reasons that the remainder do not take the deduction are: too complicated to make it worthwhile; never thought about it; tax advisor cautioned against it; and the home office does not legally qualify.
