By: Pete Solov, CPA
Key Takeaways:
- Remote and hybrid work has seen a dramatic increase due to the Covid-19 pandemic, with many employees valuing the flexibility it provides.
- Many employers are accommodating this change in order to attract and retain good employees in today’s tight labor market.
- Going virtual can save business owners money, particularly on office space, furniture and equipment costs.
- Employers should ensure they establish IT security standards that recognize remote working, as well as update their HR handbooks for dress codes on video calls and requirements for number of days spent on premises.
- Self-employed workers who work from home may be able to take the home office deduction or depreciate certain equipment.
For Business Owners, Going Virtual Can Save Money
The U.S. has seen a dramatic increase in remote and hybrid work arrangements, an outgrowth of the Covid-19-era lockdowns that employers and employees in many organizations have embraced.
Recent research has shown that in 2019 companies only offered remote work options in 4% of job offerings, but that grew to 17% by early 2022.
The migration to remote and hybrid work arrangements is driven in large part by employees, who value the time they save by not having to commute, as well as the flexibility to tend to family needs when they don’t have to be in an office all day. In today’s tight labor market, where companies in many industries are bending over backwards to attract and retain good workers, employers are happy to accommodate the desire for remote and hybrid work arrangements whenever they can.
Surveys have shown that 59% of jobseekers would prefer an employer that offers a remote work option over one that doesn’t, and 64% of high-growth companies use a “productivity anywhere” hybrid work model.
For business owners, allowing employees to work remotely full-time can have a significant impact on expenses, particularly costs for leasing workplace space, office furnishings and equipment. Many companies have already reduced or closed their office space, effectively becoming virtual businesses.
But there are differences between working in an office and working in a home office, and between attending a meeting in a conference room and attending a meeting via Zoom. The American workplace is beginning to grapple with some of those differences and create policies and procedures to deal with them.
IT Security
Cybersecurity is a major concern for companies of all sizes, so ensuring that employees are engaging in clean technology practices when they work from home is critical for all employers.
- Make sure your employees are using only company-provided computer equipment with the proper security software when working from home. Personal devices may be tempting to use for a “quick” email, but they can be subject to viruses, phishing scams and hacking, particularly if used in a public Wi-Fi environment.
- Provide a secure VPN with multi-factor authentication for employees to use to access work files.
- Implement company IT policies that recognize the remote work environment.
Human Resources
Does your company have a dress code for the office? It’s unrealistic to think you can enforce a dress code for employees who work from home. But this is the age of Zoom calls, and certain rules should apply.
- Update your HR handbook to recognize the reality of remote work, including guidance about maintaining a professional appearance on videoconferences. Remember to add something about using a neutral background when on camera. This is not a time to have political posters or wedding photos on the wall behind you as you’re conducting business.
- Consider whether you want employees to spend a certain number of days each week or each month in the office, and include that in the handbook. There may be certain events, such as quarterly staff meetings, where having everyone present in the room will help generate constructive ideas and build esprit de corps.
- If certain employees will not be allowed to work remotely – for instance, because they must monitor production equipment – spell that out in the HR handbook to avoid resentment among the workers.
Tax Implications of Remote Work
It’s important for all workers who spend their workdays in a home office to understand the tax benefits for which they may – or may not qualify. Chief among them is the home office deduction, which allows taxpayers who work from a home office to deduct a percentage of their housing costs – such as rental payment, mortgage payment, utilities and phone – that is roughly equal to the percentage of space in the home that their work-related activities occupy. Alternatively, taxpayers may take a flat $1,500 “safe harbor” home office deduction if they don’t want to do all the calculations.
But not everyone who works from home qualifies for the home office deduction. If you are an employee of an organization that allows you to work from home either full-time or a few days a week, you do not qualify for the home office deduction. Only self-employed taxpayers using home offices may take the home office deduction. Moreover, the space used must be a dedicated home office space to qualify for the deduction. In other words, if you’re working from the kitchen table, you can’t take the home office deduction even if you’re self employed.
If you are self employed you also may be able to depreciate certain equipment you use in your work, such as computers and office furnishings.
If you have questions about the implications of allowing employees to work remotely either part-time or full-time, contact your KRD advisor.
