Tax Benefits of Shared Offices
Many businesses recognize the benefits that come with sharing office space with another related company. In some instances, shared office space reduces overhead operating costs for both parties, reduces the need for individually-owned office equipment and furniture, and can reduce payroll taxes for positions that benefits both companies, such as IT assistance, receptionists and janitorial staff.
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Business Deductions
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Business owners have the ability to deduct a variety of operating expenses from their taxes. Businesses sharing office space typically utilize more physical space and more office resources than a single independent business would. As such, each is able to enjoy greater deductions with regard to rent, property insurance, utility costs, landscaping and maintenance and office equipment and supplies.
Building Ownership
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Independent companies that purchase a building together enjoy all the tax benefits associated with real estate ownership, including mortgage interest deduction and depreciation tax benefits. They may also realize tax benefits upon the eventual sale of the property.
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Capital Expenses
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The cost of capital expenses related to business operations are tax deductible. Joint purchases, improvements to the property or the financing of capital equipment can be shared equally among those sharing office space, with tax deductions taken accordingly. In this instance, not only does each business enjoy a tax deduction, but buying power is increased through the pooling of financial resources.
Shared Personnel
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Some shared business offices share key personnel, such as administrative assistants, security guards, appointment setters and couriers. Sharing the costs associated with payroll, taxes and insurance for these positions can result in tax benefits for both parties.
Hiring Incentives
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Some state and federal government employment programs provide tax relief for businesses that hire disadvantaged and displaced workers. Cohabitating companies that fill shared positions from these ranks enjoy associated tax benefits.
Marketing and Advertising
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Marketing costs are tax-deductible for business owners. As many shared office spaces are comprised of similar businesses, pooled resources for advertising efforts, such as building sineage, can be beneficial. Not only does a combined budget afford the two companies the opportunity to double their advertising exposure, each enjoys a percentage of the related tax deductions as well.
Entertainment
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A number of business-related entertainment costs are tax deductible. Shared office space that may be used by resident businesses for meetings, events, programs and seminars is tax deductible. Each business enjoys the benefit of access to a larger space while deducting the costs associated with the program, event or entertainment venues it is used for.
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References
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