From solopreneurs to corporations, the concept of a virtual office has been enjoying widespread adoption since Executive Suites pioneered it in 1994. Initially, virtual offices would provide an address. Today, however, premium services include everything from reception services to mail scanning and the use of conference rooms.
The increasing popularity of virtual offices partly results from their low cost. In California, for example, virtual offices can cost as low as $50 per month. But the growing use of remote offices comes with growing implications. With new legal precedents to govern virtual offices, how do you remain compliant? Here are four ways to stay compliant when transitioning to a remote office:
1.Check Work-from-Home Laws
Using a virtual or a remote office means that you will be working from home. In a practical scenario, some of your clients may need to meet you at your house for meetings, if you aren’t renting a workspace or meeting in public places. This implies that the law allows you to carry out business-related activities at your home.
To avoid legal issues, you must determine if:
- Your type of business qualifies for work from home.
- Local zoning laws require you to get permits before commencing business.
- Parking restrictions limit the number of clients who can park at your home.
The law makes it easier for some businesses to operate from home. Practices such as accounting and software engineering can easily transition to remote offices. However, masseurs and hairstylists may have issues as they meet their clients physically and regularly. Before transitioning to a remote office, therefore, you should ensure that your home has the legal capacity to host your specific business operations.
2. Comply with Tax Laws
As far as tax implications go, remote offices do not relieve you tax burdens or the obligation to report tax. This means that you will have to pay tax just like other businesses that operate on-premises.
Starting with tax deductions, working from home can result in a lesser tax burden. But the law stipulates that you qualify for deductions if the dedicated home office strictly serves work purposes. To put it into perspective, working from the place you enjoy a TV show disqualifies you from deductions.
While checking tax laws, examine legal precedents too. A highlight was the Telebright Corporation, Inc. case. The court ruled that the company incorporated in Delaware had to file corporation taxes with New Jersey since they had a New Jersey-based employee working from home.
3. Track the Finances
Transitioning to a virtual office demands more considerable attention to detail when it comes to money. All incomes and expenses must be recorded appropriately. A sequential filing system works best to preserve invoices and keep a clean record.
Failure to keep track of finances undermines your efforts of complying with tax laws, making you and your business vulnerable to fines. To ease the paperwork involved, you can use accounting software.
4.Hire a Tax Credit Expert
Every year, companies end up burning the midnight oil to meet tax filing deadlines. This is the time when you probably wade through tax records and fill out your tax return. It is, without a doubt, a daunting task — one that is not only frustrating but also time-consuming.
The good news is that you don’t have to go it alone. Tax credit experts are there to help you keep up with the tax code, and their expertise can help you to ensure that you get all the credits and deductions that you’re eligible to receive.
Let Incentax Help You Comply
Incentax provides your business with many solutions bundled in one package. We offer a range of tax credits to help your company ease its tax burden, advice on tax deductions, and provide secure networks for remote teams’ collaboration while ensuring your business remains compliant with set laws.
Is your virtual office business struggling with tax and communication issues? Contact us today.