Well, here you find me writing on my blog at 3am, this is what happens when you’re laid up in bed and unable to move due to muscle contractions, add a beautiful cocktail of drugs to help manage the horrible pain and to help you sleep and it is a recipe for disaster for insomniacs like myself. At least I can make the most of this time that I’m now wide-awake to do something productive (please don’t expect me to be available tomorrow at 9am!)
In Spain, registering as self-employed can be a minefield, a procedure full of set-up and on-going costs that many do not appreciate during the initial stages of development so it is only natural to find ways to reduce costs, at least at the beginning. One way many choose to do so is by working from home and while this may be a logical step, it also has its own pros and cons to consider.
Obviously, this is not an option for all businesses as many require a separate commercial unit for the exposure needed to survive and to be competitive. In recent years, many new business owners involved in I.T., consultancy and similar activities opt to work from a home office as their work mainly takes place online and does not require a face-to-face presence with their clients.
What Type of Expenses can be Deducted?
If the property is yours in ownership:
- Community of Owners expenses
- Interest paid on the mortgage
- House insurance
- Local rates such as property tax (IBI) and domestic refuse collection
This has always been a sticky issue with the National Tax Office (AEAT) because they do not have a very open view on home office deductions as they are difficult to prove. As a business owner, you must register your home office on Modelo 036 or Modelo 037 and indicate its size. This size is in relation to the overall build size of your property so if your property measures 100m2 and your office occupies 10m2 of the overall size, you would be able to deduct 10% of the above expenses.
Up until recently, the AEAT has not allowed deductions in concept of utilities (water and electricity consumption) unless separate meters are installed to differentiate between personal and professional use. However, there have been a number of favourable rulings pro self-employed business owners who work from home but in the event of dispute with the AEAT, it would require a court hearing to resolve along with all the costs involved with such a procedure. To this end, many choose simply not to deduct said expenses at all, even if it is in proportion to the size of their office. On the other hand, if you did decide to deduct these expenses and a dispute were to arise, the other option would be to pay back any tax relief you may have obtained at the time.
If your home office is situated in a rental property:
- The proportional amount of the monthly rent
- You may not deduct utility expenses as it requires a separate meter
Any deductions the professional chooses to make are of course subject to being accepted by the AEAT in the event of a tax inspection so do not take these as gospel proof that by declaring, you are completely fulfilling your tax obligations.
Where Should my Home Office be Situated?
This is the next problem. Where should the office be situated within the home? This would depend on your personal home life, I mean, do you share your home with your spouse, children or other relatives? If this is the case, it must be located in such a way, you can shut yourself off during your working hours. Sometimes though, this just isn’t possible so a combined format would come into play where your office is in a communal area of the house but that doesn’t mean it cannot be just as functional for your needs.
Combined Living Room/ Home Office Space
Do you expect to meet clients at your home office? If possible, a separate entrance to the main house would be ideal. Not only does it prevent your clients from getting a glimpse into your personal life but it also provides a more professional outlook form your clients’ point of view. Ensure the office is tidy and secure, well distributed so that it is functional with plenty of natural light.
Modern separate home office
One thing I noticed from when I began my own venture to now, almost five years down the line is that a big bulk of my day was used up visiting my clients in their place of business because I worked from a home office that at the time was not ideal for visitors. As my business grew, I realized that big changes were necessary and one of those was to either source an office space in a good location or refurbish the house to incorporate a fully functional and productive office space to serve my purpose. After a lot of investigation, cost assessments and personal evaluations, I decided on the refurb. A main factor was the ridiculously high rental charges (I mean I know property owners have the right to charge what they want but what is this, 2003 in the middle of the property boom?!). Add on top extra utility charges, Internet and phone lines, possible community fees, maintenance, commute and a long etc, to see whether it is financially beneficial or not to go this route.
Major Downside – DISTRACTIONS!
To work from home requires an extremely disciplined mind and not everybody can handle the responsibility. With no boss looking over your shoulder and no specific work hours to fulfill, it can be so easy to become distracted with other matters when you should be hard at work. If you live with others, ask they respect your set work hours to avoid unnecessary distractions otherwise your home office dream will soon turn into an absolute nightmare.
Even if you live alone, it does not mean your work day will be distraction free. The sofa. The TV. Domestic chores (really?) will call out to you but you have to resist the urge to procrastinate or take excessive coffee breaks with friends or neighbours.
Probably not the most ideal work environment…
Something I hear all the time, “Wow Sabrina, you’re so lucky! You can work in your PJs if you want, work from bed or the sofa”. While this is true, I choose to get up, shower and dress for work as if I worked in a regular office. Why go to all the hassle? Simply because it puts me in the correct state of mind and sets me up for the rest of the day. OK, so right now, I’m technically working on my blog from bed but come on, it’s now 3:31am, that’s a given. I set office hours for myself and a schedule so I can be sure to be productive everyday and PJs are a big no-no for me. All that does is make the sofa and picking up the remote control more enticing which is why it is important to place your office in a place free of all those distractions. Hey, take a break of course during the day as you would anywhere. At these times, I might put a load of laundry on or dust the living room because doing something else even if they are chores is a break away from the computer or whatever else you were doing. The key is that these should be momentary chores and then it’s back to the grindstone.
Middle Ground
Coworking offers an alternative and more cost-effective office space especially for start ups
If neither option is a good fit for you, perhaps coworking is the way to go. This method took off in Spain only a few years ago but it allows business owners to make use of a shared office space with minimal costs involved and full amenities (electrics, Internet etc) available as well as assigned work spaces and meeting rooms for extra privacy. It is also a great way to interact with others that may be in your field and bounce ideas around. This of course depends on the nature of your business and they type of information you handle. For example, if you have access to sensitive client information, this is probably not the right choice because you cannot guarantee 100% privacy from other users in the shared space. There is an organization in Corralejo, Hub Fuerteventura that offers this service so check them out. The Fuerteventura Chamber of Commerce (Cámara de Comercio de Fuerteventura) also offers office spaces for start-ups, but truth be told, they have undergone a few changes over the years but even still, it may be well worth checking out.
The Big Upside!
As always there are plusses. I no longer have to commute to my place of work and as self-employed I can be more flexible with my working hours if I need to so I can make the most of the times when I am most productive instead of forcing myself into the traditional 9 to 5 mould. In my line of work, there is a lot of coming and going to Puerto del Rosario, other municipalities and Lanzarote to arrange paperwork etc so I try to minimize these to one or two set days a week because believe me, I could probably drive out to Puerto del Rosario everyday and still have plenty to do there but is that productive? Not at all! So I try to organize these trips outside the office to cover as many services as possible in one go and enjoy my office time to the max.
I think I’ve said this many times but taking the plunge to become self-employed definitely changed my life for the better. Admittedly, it is a long slog and there are days when I’m still hard at it at midnight but at the end of the day, I get out of it what I put in and it is a gratifying experience. It is not always a bed of roses especially at times like these when I am unable to work properly due to illness or at manic times of the year when taxes are due (still recovering from January!) but by prioritizing, these issues can be overcome. Your business will not fall flat on its face in a matter of days but as a rule, us selfies do not have the right to be ill. No work, no pay and all that but still no regrets.
