The number on a listing is the rent. The number that matters is what the office costs you every month, all in. Two offices with the same rent can differ by hundreds of dollars a month once you add utilities, internet, and the drive.
This guide walks through every cost worth counting, with a worksheet at the end.
Rent
Start with the base rent, and find out exactly what it covers. A lease where heat, electricity, and internet are included will usually have a higher rent than one where you pay them yourself, and it can still be the cheaper option overall.
Small-town office rent is generally lower than in downtown Grand Rapids, but it varies from building to building and room to room. The only reliable comparison is between real quotes with the same things included.
Utilities
If utilities aren’t included, you’ll pay some or all of these:
- Electricity for lights, computers, and any space heater or air conditioner
- Heat, which in a Michigan January can be a larger bill than you expect in September
- Water, sewer, and trash, which are sometimes split among tenants
Ask what previous tenants typically paid, or ask for a range. If the office shares a meter with the rest of the building, find out how your share is calculated.
Internet and phone
Most offices need internet, and many small businesses need more upload speed than a home plan provides, especially for video calls or sending large files. Ask which providers serve the building and what speeds are available, then get a quote.
If you keep a business phone line, include that as well. Many small offices now use a mobile phone or an internet phone service instead of a landline.
Insurance
Most commercial leases require tenants to carry general liability insurance, and many ask you to name the landlord as an additional insured. You’ll also want coverage for your own furniture, computers, and files, since the landlord’s policy usually covers the building but not your things.
For a small, low-risk office, this is often a modest yearly premium, but get a quote from your agent before you sign.
Getting set up
These are one-time costs, but they belong in your budget:
- Security deposit and first month’s rent, usually due at signing
- Furniture, if you’re not bringing it from home
- Moving costs, even if it’s just a rented truck and an afternoon
- Signage, if the lease allows it
- Internet installation, if your provider charges for it
- Printing new business cards and letterhead with the new address
Cleaning and upkeep
Find out who cleans the shared areas and who cleans your office. Some buildings include cleaning of common areas and leave your room to you. If you’d rather not vacuum your own office, a cleaning service is another line in the budget.
The drive
This is the cost most people leave out, and it’s often the largest.
Mileage. Multiply your round trip by the number of days you’ll go in each month, then by what driving actually costs you. The IRS standard mileage rate, which is updated each year, is a reasonable stand-in for fuel, maintenance, and wear.
Time. Your time has value. Compare two options:
- An office 10 minutes from home: 20 minutes a day round trip
- An office 45 minutes from home: 90 minutes a day round trip
Over about 20 workdays a month, that’s a difference of more than 23 hours of driving every month. For a self-employed professional, that’s time that could be billed, or spent at home.
What you get back
It’s fair to count the benefits too, even the ones that are harder to put a number on:
- Tax treatment. Office rent, and utilities you pay for the office, are generally deductible business expenses. Ask your accountant how this compares with your current home office deduction.
- Space at home. The spare room becomes a room again.
- Client confidence. A proper office can help win and keep clients who were uneasy meeting at your house.
- Focus. For many people, a separate workplace means more work done in fewer hours.
Worksheet
Fill this in for each office you’re considering, using real quotes.
| Monthly cost | Office A | Office B |
|---|---|---|
| Rent | ||
| Electricity (if separate) | ||
| Heat (if separate, winter average) | ||
| Water, sewer, trash (if separate) | ||
| Internet and phone | ||
| Insurance (yearly premium ÷ 12) | ||
| Cleaning | ||
| Mileage (round trip × days × rate) | ||
| Total per month |
Then add the one-time costs (deposit, furniture, moving, signage) separately, so they don’t get lost.
Next step
Once you have a total, compare it with what the office gives back. If the numbers work, the next step is seeing the room. Request a tour, and bring the questions from what to ask before you lease to fill in the blanks.