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What Are the Hidden Costs of Running a Business from Home?

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Running a business from home is definitely cheaper than opening a brick-and-mortar store or leasing an office, but it doesn’t mean that there are no hidden costs that come with it. In fact, many entrepreneurs make the mistake of underestimating the costs of starting a business, especially when they overvalue the assumed savings they will get from running the business from home.

To avoid making the same mistake with your own venture, here are the hidden costs of running a home-based business that you need to allot a budget for:


Homeowners’ insurance does not cover your business-related activities. In fact, running a business from home can even invalidate your home insurance policy, so make sure to check with your insurance provider regarding this matter.

To protect your business against potential losses and damages, here are the types of coverage you might need:

  • Business property. This type of insurance provides coverage for your business property, such as home office equipment, in case of damage, loss, or theft. Specifically, business property insurance covers the property that cannot be covered by your homeowners’ insurance.
  • Business vehicle. If you use your vehicle for business purposes, you need business vehicle coverage to cover damages or liability expenses in case of untoward incidents.
  • General liability. Just like a typical brick-and-mortar business, home-based businesses should have general liability insurance to cover medical expenses in case your clients or employees get injured while on your property.
  • Professional liability. If your home-based business provides services, professional liability insurance will protect both you and your client if something goes wrong.
  • Product liability. This type of coverage will help cover damages caused by the nonperformance of your product.


Many home-based business owners underestimate the additional costs that will appear on their bill when they start operations. Keep in mind that you’re going to be using your utilities a lot more now that you are running your business from home. For instance, you need to keep your lights on your home office all day, which can contribute significantly to your utility bills.

Home office

Unless you already have a home office set up, you’re going to want to invest in furniture and equipment that will allow you to operate your business smoothly. Home office expenses can include:

  • Computer or laptop
  • Printer
  • Keyboard, mouse, webcam
  • VoIP phone system
  • Office furniture
  • Office supplies

Most home-based business owners don’t think about these expenses because they rely on what they already have. However, setting up a home office dedicated to your business helps keep your home and work lives separate, which is an important factor in maintaining productivity.

Blogging and working from home


Even if you have bought brand new equipment for your home-based business, don’t omit maintenance from your budget. Brand new equipment is not impervious to breakages and malfunctions, and the last thing you want is to put your operations on hold because you’re not financially prepared for repairs. Hence, a good practice is to keep a cash buffer for equipment maintenance in case something happens.

However, if you are using old equipment, it is best to have enough money prepared to buy a new one in case it finally dies.


You might be running your home-based business on your own for now, but there will come a time that you have to outsource to freelancers or outside companies to take some of the workload off of your shoulders. And although you can outsource to freelancers for a relatively low price, the costs will still be high.

Before starting your business, assess the work that you have to do to keep it running. Do you have enough time to perform all of your tasks without sacrificing the quality of your work? If you think you might be pushing it by relying only on yourself, allot outsourcing costs to your initial budget.

Payment delays

No one wants to receive their payment late, but sadly, we don’t live in a perfect world where all clients pay on time. And as a small business owner, you can’t afford to receive your payments late, especially if they will be used to cover your expenses. That said, be prepared for delayed payments. Besides optimizing your cash flow to cover late payments, setting clear payment terms and holding clients accountable for late payments are good strategies for securing your financial stability.

Starting your business from home typically requires a smaller capital than when leasing an office or a commercial space. However, you mustn’t forget about the hidden costs of running a business, especially those that come with operating from your home.

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