In the current COVID crisis, many states are requiring non-essential workers to work from home. If you funded your business with a ROBS 401k business financing plan, your CPA or tax advisor may suggest that you take a home office deduction or charge your business rent.
For a ROBS-funded business, below are 3 important considerations with regards to using a “home office”:
Don’t Charge Rent
The C-corporation that is funded with your retirement funds can’t pay you rent to use part of your home as a home office (nor can you take a deduction on your personal income taxes) since you can’t personally benefit from the ROBS 401K investment.
If you will operate your business across a geographic area that includes multiple municipalities that each require a business license, consider whether such municipalities provide license reciprocity to a central city, and if so, whether such central city has an address requirement.
For example, let’s assume that you will operate a bread route in metro Las Vegas and that each suburb of Las Vegas requires a business license, and further, that the suburbs will recognize a business license issued by Las Vegas but not by the other suburbs.
In that case, you may wish to obtain a single business license in Las Vegas rather than separate business licenses in each suburb in which you will operate.
In that case, if Las Vegas requires that you provide in an address in the City of Las Vegas in order to obtain a business license you will need an office address in Las Vegas if you reside in the suburbs.
For the sake of privacy, consider whether you wish to rent office space that will allow you to provide an address other than your home address in your business dealings.