4 ways the shift to remote work can impact your business expenses

The rise of remote work has fundamentally reshaped the global workplace, transforming how and where we conduct business, and prompting a significant shift in work-life balance and corporate culture alike.

But this widespread change not only influences operational dynamics—it also introduces new tax implications as businesses navigate significant changes in the way expenses are defined and understood, in addition to grappling with tax regulations across multiple locations.

Where the relentless evolution of business is concerned, only one thing’s for sure: knowledge is power.

Here are 4 ways a shift to remote work is likely to impact your business expenses:

1. Fewer traditional office expenses

With more (or all) of your employees working remotely, there is a natural reduction of costs related to physical office spaces. This includes rent, utilities, maintenance, and services like cleaning or security. Office supplies, furniture, equipment, and even stationary also become less of a need. Reduced deductions for all of the above deserve your attention, as they can impact your overall tax liability. If you choose to go fully remote, you may even eliminate these costs altogether.

2. Higher tech and infrastructure costs

With the move to remote setups comes an initial investment in remote work infrastructure. You may be facing costs associated with purchasing and setting up home office equipment for employees. Ongoing tech costs like subscriptions for communication and project management tools are integral, as is IT support and training for employees. And since remote work relies more heavily on potentially insecure home networks, a larger budget for cybersecurity and data protection are required. Increased deductions for all this essential tech can help offset taxable income.

3. Changes in employee reimbursement and benefits

If you previously offered travel allowances, commuting benefits, and/or parking fees to employees, chances are these will see a significant reduction. That said, you may need to reallocate funds for home office stipends. Employee benefits may need to be adjusted to include enhanced digital wellness resources, and other modified health benefits that cater more to the needs of remote employees—such as increased mental health support services. All of the above may lead to noteworthy changes in your deductible expenses.

4. Administrative and HR changes

As the result of fewer costs related to physical onboarding spaces, staffing and HR management budgets tend to drop. Meanwhile, investment in virtual recruitment tools is rising. Your business might reduce the costs associated with administrative staff as you streamline operations and rely more on digital automation to handle routine tasks. With the potential for broader recruitment from a global talent pool, you may also need to budget for compliance with diverse labor laws across multiple jurisdictions—in other words, you may need specialized legal expertise, which, thankfully, is a deductible service expense.

With all the new tax considerations for remote work setups—some simple and others intricately complex, it’s no wonder that business accounting practices need to be adjusted to reflect these changes.

Leveraging a cloud-based accounting system is a solid first step to addressing changes in your expense structures, facilitating timely decision-making, and making expense-tracking across disparate locations a lot more feasible. It can also support compliance—even with a geographically dispersed workforce—by automatically updating to reflect current tax laws and regulations.

So if you’ve gone remote (and even if you haven’t!), know this: a cloud-based accounting firm for the digital era is among the most potent tools at your disposal come tax time—and all year round.

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About Xen Accounting

Xen Accounting is a virtual accounting firm designed for modern day small business owners with one goal in mind: to create a truly pain-free accounting experience. Through technology and a forward-thinking approach, Xen Accounting is focusing on delivering professional accounting services for businesses in the digital age. To contact Xen Accounting, please email info@xenaccounting.com.

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