Monetary Considerations

If you’re thinking about discussing a telecommuting arrangement at your current job, you probably have some questions about how it will affect your finances. Similarly, if you’re thinking about becoming a freelancer in your field, there are a number of important financial considerations to make before you take the plunge. The following are some of the most significant financial pros and cons to weigh before you start working remotely.

 

Savings

How much you save will depend on your current situation. If you’re currently commuting to a full-time job, you probably have significant costs associated with getting to your job, even if it’s not that far from where you live. Commuters may be forced to pay for public transport, or if you have a car, all the costs associated with your car, including gas, parking, tolls, and maintenance. Cutting out your daily drive can mean saving a fair chunk of change.

When you work from home, you may also save money on less obvious things, such as food and clothing. Food costs may go down; when you’re at the office, it’s all too easy to eat out every day or grab food on the go, as opposed to preparing a lunch ahead of time. However, at home, you may be less inclined to do so, given that your own refrigerator is probably closer than most restaurants. You also have free reign over your hours, so you can choose to take your time and make a proper lunch. In the case of clothing, remote workers do not need an extensive wardrobe, in most cases, one or two business outfits will suffice for video conferences and face-to-face meetings. The rest of the time, it’s possible to dress however you feel comfortable.

Finally, depending on your arrangement, you might also save on childcare costs. If you have young children, it is possible to work from home and take care of the kids. While some may find that children at home are a distraction, it may be as simple a matter as earning a bit of money on the side while you’re at home with the kids.

Costs

For some, there are added costs to working from home. When it comes to taxes, these added costs will depend on your status as a freelancer or an employee.

Employees who work remotely for a company do not do their taxes any differently than they would if they were working on-site. Freelancers, however, must make quarterly tax payments and are subject to a double-tax, as both the employer and the employee in their own company. It is important to seek the help of a licensed accountant when you are just starting out in order to understand what this will mean for you financially.

Other costs that can add up when you w ork as a freelancer include healthcare. Without company benefits, it may be a stretch to pay for unexpected health and dental costs when they arise. As freelancing becomes a more prevalent work arrangement, organizations are looking towards providing health insurance for self-employed persons. However, as it stands there are few options other than paying out of your own pocket.

Finally, depending on your profession, working from home may mean added operational costs, such as heating your house throughout the day, using electricity, paying for a faster internet connection, and purchasing any hardware or software you need to do your work.