Whether you're the accountant for a business or you run your own business, trimming down expenses is part of the job. Part of this is more nuanced than simply cutting out costs—it requires knowing which expenses are tax-deductible, so you and your employees' take-home pay doesn't take the hit. For a lot of businesses, office space is one of the biggest and most complex costs. So, are coworking spaces near you tax-deductible? Can you get extra financial benefits for switching to a flexible coworking space model?
Are Coworking Spaces Tax-Deductible for Businesses with Multiple Employees?
Coworking spaces are generally tax-deductible for the businesses that rent out the space. So, if teams, departments, or even individual employees need a temporary or permanent office space that isn't at home, you can provide one for them and not worry about the corporate tax rates. This applies to:
- Renting out conference rooms or whole floors for big meetings and events
- Private office spaces near you for employees who need them
- A/V equipment rentals, as well as printouts, mail, virtual services, and receptionist services
- Subscription memberships for open coworking spaces so employees can come and go based on their schedules
However, you may need to advise your employees that the business claims the tax benefits, not them. If they are a W-2 employee, they just get the benefits of the space and the amenities (which are hefty consolation prizes).
Are Coworking Spaces Tax-Deductible for Solo Business Owners and Freelancers?
The answer here is also "yes!" If you own your own business, you're a contractor, or you're a freelancer, renting out coworking space near you is tax-deductible. In fact, for many individual business owners and contractors, this can be a lot easier than trying to carve out a home office and maintain sufficient documentation for the IRS. Instead, you can just keep track of the monthly membership costs and any additional spaces, services, and amenities you purchase.
What About the Fringe Benefits of Hospitality-Driven Coworking Spaces Near You?
The tax benefits of having a membership to a hybrid workspace near you are even more comprehensive than you might have expected. If you run your own business, a lot of the "common and necessary" day-to-day expenses of working on the go are also tax-deductible—or at least half tax-deductible. Coffees, business meals, and snacks all count as appropriate business expenses that qualify for a 50% tax deduction.
If you manage expenses for an organization with multiple employees, a manager buying coffees for a team meeting generally counts as a refundable expense for them (depending on your company policy) and a fully tax-deductible expense for your business. If you are a solopreneur, you can take 50% for your own meals and coffees and then 100% for gifts for clients, networking associates, and anyone else you have a business meeting with.
How to Document Your Business Expenses
Once you know that office space on demand can be a qualifying business expense, finding private offices for rent near you can suddenly be a lot more appealing. It reduces the cost for you or your organization, it simplifies your day-to-day routine, and (if you're used to dealing with the messy gray areas of a home office) it simplifies your tax prep. But there are still a few to-dos to keep in mind. To make sure you can clearly mark your office workspace as a business expense, follow these tips:
- Save your receipts or invoices every month so you don't have to search for them later.
- Get a business card that you use for all of your business expenses, including the rent for the coworking space near you, any offices at the coworking space, and so on.
- Double-check with your accountant so you have a fully personalized answer regarding incidental expenses, travel, and one-off expenses.
- Take notes about unusual expenses, such as big dinners or gym networking event passes for your team, so you don't leave out any expenses at the end of the year.
Streamline Your Operations by Renting a Coworking Space Near You
At Quest Workspaces, we provide hospitality-driven coworking spaces near professionals in New York City and South Florida.
Check out our meeting rooms in person or contact us online to see how our hospitality-driven coworking spaces fit into your routine and your finances.
