How to Reduce Your Home Office Costs


Running a small business from a home office presents a great opportunity for entrepreneurs. If it’s planned right, a well-run home-based business can become just the springboard needed to grow a small company into a powerful force in the market. One of the best ways to help ensure success with any small business is to bring down the hammer on unnecessary costs, reducing expenses to absolute bare minimums so that more revenue can be realized as profit at the end of every quarter.

A home-based business is no different. By being as critical as possible about the expenses that you incur, your home office can work like a well-oiled, hyper-efficient machine. Get your costs low enough, and you could start your own business out of your house for very little money invested on the front end.

To help with the effort of reducing expenses within your own fledgling enterprise, here are a few ideas for cost-cutting that you might not have considered.

Know Your ‘Cost Centers’

According to Investopedia, a cost center is referred to as “a department within an organization that does not directly add to profit but still costs the organization money to operate.” For home-based businesses in their infancy, just about every ‘department’ is going to be a cost center until revenues start to cancel out expenses. The first step to reducing costs is to identify the multiple categories of your expenses, and then take action to reduce them one at a time.

Let’s have a look at what some of the most common expenses are for those who’re operating their businesses from a home office:

  • Rent/Mortgage. This is probably the most obvious expense related to running a home-based business. It also tops the list as one of the largest costs you’ll incur on a monthly basis. But, because you’re presumably living in your home while you’re working out of it, rent or mortgage is about as necessary of an expense as is possible.

    This isn’t to say that it can’t be reduced. In fact, by starting with an honest appraisal of how little you can spend every month on a rent or mortgage payment before you begin outfitting a home office, you stand a higher chance of this cost not being as painful as your business scales.

  • Utilities. Utilities-related expenses for your home office are bound to go up as your business grows. Longer hours and the addition of more capital equipment will invariably mean increased power bills. Keep this cost under control by shopping around for the best deals you can find on the services you know you’ll need, and don’t leave anything off the table – from trash collection to home internet service. Be absolutely sure you’re getting the best deal on everything needed to keep the lights on and your business thriving.
  • Insurance. Insurance premiums for your business can sometimes be bundled with other insurance products you’re already taking advantage of. Inquire with your current car, home, or life insurance provider to find out if adding on business insurance can result in an overall lower bill. Also, if you’re forming a company to be run out of your home, be sure you know where your business insurance coverage stops and your business’ liability starts. There can be redundancies between the two which may be eliminated to save on costs, depending on the kind of business you’re running.
  • Shipping. If your home-based business involves shipping products out to customers, then you’re going to want the most affordable yet efficient shipping strategy. Will this mean that you will need to invest in your own carrier-specific expense account tied to a custom shipping label printer? Perhaps not, as much of what needs to be done to produce a shipping label can be achieved with just your computer, a printer, and an internet connection.
  • Office supplies. Paper, folders, binders, pens, and other home office necessities can add up to a sizeable expense. The solution? Buy in bulk, and for the most costly items – things like printer ink cartridges and electronics – rely on eCommerce platforms that give you the value of smaller supply chains. Think eBay instead of your local office supply store.

Don’t Neglect the Miscellaneous

There are yet other expenses to focus on, too, including travel, client entertainment, and any taxes that you might be liable to pay. By categorizing these and monitoring their fluctuations month-in and month-out, you can catch runaway cost increases before they become too much of a problem.


If you’re going to be doing any travel whatsoever for the purposes of meeting with clients, securing supplier relationships, or even just heading to the post office to ship a few things, you’ll want to have a smart strategy for keeping costs down. For air travel, it pays to use multi-carrier comparison websites and be sure you take full advantage of the many points-based rewards programs.

For road travel, this may seem obvious but invest in a vehicle with highly rated fuel efficiency and a reputation for reliability. As tempting as it might be to get a car that will impress your clients, take the pragmatic approach, swallow your pride, and opt for economy instead. After you make your first million from your home-based business, you can revisit the idea of a flashy chariot. But, for now, there’s no shame in choosing a budget vehicle over a newer one.

Client Entertainment

Depending on the size and appearance of your home office, it may or may not make sense to hold business meetings in your home. Even taking a client to for a coffee or out for a quick sandwich at a deli can be a great opportunity to bond with those you’re doing business with. Don’t think you have to go over the top to endear yourself to potential customers, either. A lot of the time, simply spending time with them and connecting on a human level is all that’s needed to instill a sense of trust that will go a long way.


You could fill an entire library with information related to spending as little as possible on the taxes you’ll need to pay as part of running a home-based business. There are many taxes you’ll need to be aware of and all can account for a serious dent in your margins if you’re not careful. Less money paid in taxes means more cash to invest in growing your business.


A final tip for keeping home office expenses as low as possible is to revisit each of the categories listed above at least once a year. Technology improves at a blazingly fast pace, and sometimes you can use it to reduce costs you didn’t think could get any lower. Given enough self-discipline and attention to optimizing cost centers, virtually any home-based business can become a paragon of profitability.

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