Have you been told that because you have an office outside your home that you may not have an office in the home and are thus unable to deduct home office expenses?
That's wrong! You can have multiple locations for a business. The key is that you must meet two rules in order to deduct a home office for a business:
1. You must use an exclusive portion of your home regularly where you do the substantial administrative and management activities (such as paperwork).
2. You have no other fixed location where you conduct substantial administrative and management activities.
Administrative activities involve studying for business, keeping books and records, doing paperwork, making appointments, and billing customers, clients or patients.
Also note that sales work done in another office is fine. This is not considered administrative work. Sales work includes seeing prospects and clients, getting contracts signed, going to sales meetings, etc.
For Canadians, the rule is a bit different.
You also can have multiple offices for a business, but your home must qualify as a place that you use an exclusive portion for your principal place of business. This generally means that you do your most important functions for your business at home. This can involve calling prospects, distributors or clients from your home, or meeting them there.
Also, if you spend the majority of the time working your business from your home, your home should qualify as your principal place of business. For most home-based businesses, your home should qualify as your principal place of business in both the U.S. and Canada.
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