4 Ways to Stay Compliant When Transitioning to a Remote Office

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 are catering for phone answering, mail scanning, receptionists, and boardrooms to help maintain productivity.

The widespread use of virtual offices can be resulting 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 meet you at your house. It 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 customers 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 business operations.

2. Comply with Tax Laws

As far as tax implications go, remote offices do not relieve you of 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 becomes a challenge when working remotely, as it 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, the tax season is always a time when companies burn the midnight oil to meet the filing deadline. It 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.