Well, there really is no such thing. But there are deductible expenses related to coworking* that you should consider.
Office
It doesn’t mater if you’re a full time resident or a Daily Desk drop in, every nickel of your coworking expense is deductible. Whether you call it “Rent” or “Office Expense” it can all come off the bottom line. I’ve had a home office for many years. I was often scared to deduct the expense of it because of “audit fear.” And the record-keeping for utilities, mortgage expense, etc. were a hassle. At a coworking space all of that is moot. You deduct one expense and the rest is included. And your clients don’t have to go through the dining room to get to your office. And the dining room doesn’t also double as the “conference room.”
Auto
Unless you’re a full or part time resident at space like C4 Workspace you should be able to deduct all of your driving expense to and from. You can use the mileage method or the all expense method by keeping receipts for everything car related. You never have to worry about “parking” since the parking free at C4 Workspace, either in the parking lot or on the street. The bummer on the mileage expense deduction is that it will go down next year from 55 cents in 2009 to 50 cents in 2010. Seems like an incentive to take public transit or ride a bike. Which are also deductible one way or another.
Meals and Entertainment
We’re luck y at C4 Workspace in that we have lots of great, cheap restaurants nearby (moderate and expensive ones too) to entertain clients or to talk about collaborating on a project. You can deduct 50% of the cost of a meal. (And have you tried the sandwiches next store at The Filling Station? You’ll never have a lunch meeting anywhere ever again!)
Legal and Professional Services
Part of coworking is discovering new resources and partners. If you hire or contract with another professional you meet at C4 Workspace you can deduct that expense.
Insurance
Like every business we have an insurance policy to cover the space or accidents. And that’s deductible. We also encourage anyone who works in the space to have their own insurance on the equipment they bring in. This is especially true for Residents who have a full time desk. They should have something like a renter’s insurance policy for their stuff. And that’s deductible. (And, coincidentally, we have a member, Joe Solis, who is a business insurance specialist. You just never know who you’ll meet when you cowork!)
Start-Up
C4 Workspace is a start-up business and we had lots of expenses to get the place open. Lord knows we’ll be deducting them! But, if you’re starting a business there are certain expenses that you can deduct to get started. They may include some of your operating expenses before you open your doors. But if start up capital is tight it doesn’t matter if you can deduct it or not. Coworking is perfect for a new business that needs a very affordable professional location. You pay rent for your desk and the infrastructure like a conference room, internet, utilities, even a printer, are thrown in. And you get an opportunity to meet contacts and do some targeted marketing for cheap. Such a deal!
* This is the time of year when you can play catch up on some deductible business expenses. In fact you can deduct an expense this year for a service you use in 2010. The basic rule is that you need to spend the money or write the check in 2009. So, if you need a workspace occasionally this would be a good time to pick up a 5 Pack of Daily Desk passes ($90). If you need a workspace on a regular basis then a Coworker Desk Plan ($150/month for unlimited business hours) might the right thing. And if one of your resolutions is to get a professional presence for your business then a Resident Desk Plan ($280/month for 24/7 access) might be the right step. And if you just want to get started coworking then an annual membership at $50 (including 2 Daily Desk passes) would be just the, uh, ticket.
Nothing in this article should be considering accounting advice. In fact, even as a advice you should take it with a grain of salt. You should definitily consult with an accountant or financial adviser whenever you try to negotiate the labyrinth we know as the “U.S. Tax Code.”
