(MONEY Magazine) – Andrea Edmonson used to waste hours every day driving back and forth from the townhouse she shares with her husband Steve Cox to the sales office of their residential real estate development company in Minneapolis. These days, she still occasionally jumps in the car to visit construction sites, but the hectic rush-hour commute to her office has become a short walk down a flight of stairs. Since setting up an attractive office (pictured at left) six months ago in what used to be the family room on the ground floor of their home, Edmonson has saved not only time but money. The transformation cost $4,000 all told, but she and her husband no longer pay $12,000 annually in office rent and insurance. And the move has even boosted business. When potential buyers visit, says Edmonson, ''they stay much longer than they would in an ordinary office because it's so comfortable. Our sales pitch is that we custom-build homes for the way people live, and our house is designed for the way we live. It couldn't have turned out better.'' Your home office need not be as well appointed as Edmonson's to be just as functional. And you don't have to be self-employed for a home office to make sense. Whether you are selling widgets, bringing work home in a briefcase or just trying to get a better grip on your personal finances, the right type of home office can help you meet your goals. More and more people are coming to that conclusion. The American Home Business Association estimates that 27 million of us labor from home at least part of the time, up from 23 million just five years ago. Says Julian Cohen, AHBA chairman: ''Working at home used to carry a stigma. It's grown and gained respect as computers and communication devices got smaller and cheaper.'' Personal computers, especially the venerable IBM PC and Apple's Macintosh, led the revolution. (For a complete report on home-office gear, see the article on page 80.) Silicon Valley marketers discovered that the computer's real value was not for balancing checkbooks or playing Donkey Kong but for bringing the workplace into the home. Today you can crunch numbers, keep address files, tap into remote computers, even publish your own book -- all with Fido at your feet. The simplest telephones come with features like speed dialing and automatic redial. And if you can forward your calls from the office, no one even has to know you are at home. Personal copiers, such as Sharp's Z-55 ($1,299), bring office-quality copying to your living room. And the new darling of the technology market, the $1,000 home fax machine (see page 86), enables you to zip documents anywhere in the world for just the price of a phone call. While technology has made the home office increasingly viable, the changing needs of workers and their employers have made it necessary. Two-income families can more easily maintain their professional lives while raising children. Indeed, a survey by Thomas Miller, a consultant for the New York City-based research firm Link Resources, found that two out of three home workers are in dual-career households and more than half have kids under 18 at home. ''These people have to juggle to make all the pieces fit,'' observes Miller.

Terri Pasquale of Denver can attest to that. The mother of two, ages 5 and 3, she runs a home accounting business with little more than an Apple II+ computer and Epson printer. ''I wanted to stay with my children and work,'' she says. ''This allows me the best of both worlds.'' Those who toil at home cite other benefits as well, notably increased productivity and independence. Says Claudia Cohl, editor-in-chief of Home Office Computing (which, significantly, started out in life as Family Computing): ''Kids of the '60s saw that they could make things happen. Now they say to corporations, 'If I can't do it with you, I'll do it my own way.' These people want to have greater freedom, avoid interruptions and get more work done.'' Cohl herself endorses flexible work styles: one of her senior editors telecommutes, working from a converted barn in Massachusetts and communicating with other staff by phone, modem and fax machine. He shows up at the magazine's New York City office only a few days a month. Not all bosses would be comfortable with that arrangement, but employers too can profit from the home-office boom. Managers have found they can save on office space and benefits by turning some workers loose and buying their services a la carte. ''It's usually the highly skilled ones who are sent home,'' says Julian Cohen of the American Home Business Association. ''Cost cutting has given birth to the home-based consultant.'' Of the entire home-work population, Cohen estimates that almost half, or 13 million, derive their main income from a home-based business or profession, another 10 million take work home from a regular job, about 3 million work in an office but run small businesses on the side, and 600,000 or so telecommute. But no one says you have to earn wages to set up a home office. The business of running a household and managing investments can be reason enough. Sometimes, you may even be tempted to change careers. That's what happened to Dr. Hillard Chemers of Chicago when he equipped his home office with Lotus Signal (see page 80) to pull in up-to-the-minute stock quotes and WarMachine software ($1,200) to do a continuous technical analysis of them. Now he spends weekdays managing a six-figure investment portfolio while working in the emergency room only on weekends. ''I can program my computer to collect data even if I'm not there, so I'm not chained to it,'' he says. Chemers hopes to phase out of medicine entirely within five years. The desktop publishing industry would not exist without low-cost laser printers (see our suggested setup on pages 82-83). But if you aren't putting out a newsletter, you may want the latest wrinkle -- a desktop scanner. With the Canon IX-12 ($945 plus $245 for an interface board), you can capture images from photos and drawings and insert them in any document using Aldus PageMaker ($795 for the IBM PC, $595 for Apple's Macintosh). Add a program like ReadRight ($595) and your scanner can read typed documents directly into memory -- avoiding hours of tedious retyping when a manuscript arrives on paper. Not every home office must bristle with such gear. James Delson of New York City simply perched an Epson Equity III+ computer on a board over two file cabinets to turn a childhood hobby into a business buying and selling toy + soldiers that now has a $1 million inventory. The trick is to choose the right equipment and space. Here are some suggestions: First, check the local zoning regulations to make sure you won't encounter problems from the city. Next, select a space to work in. If you want a tax deduction, devote a well-defined area solely to the office (see the box on page 74). Then lay in some reliable equipment. A good phone, a second phone line (or call-waiting service) and an answering machine are essential if your business depends on making or taking calls. You'll also want a computer or dedicated word processor (see the PC/AT clone on page 80). Besides generating letters, reports, financial analyses and the like, the computer can organize your life with an inexpensive desk manager like Take Charge! ($100). This program serves as your appointment book, address book, phone dialer (if you have a modem), notepad, calendar, calculator, and even alarm clock to get you up in the morning. After that, your choices depend on your tasks. Morris and Edna Goldberger worked as children's book publishers from their Nutley, N.J. home for two years before they tired of running out for copies and bought a Sharp Z-70 copier ($1,599) instead. An unexpected bonus, says Edna: ''We don't have to buy two copies of the New York Times for both of us to do the crossword puzzle.'' As to fax machines, experts agree that you don't need to rush out and buy one yet -- at least not until your first client asks for your fax number. ''Just say the fax is out of order and then rush out and buy one,'' advises Julian Cohen. One possibility: the Medbar Portafax III (pictured on page 87), which is light enough to go on the road, if your job requires it. If you buy expensive hardware, make sure it's insured. Most homeowners policies don't cover items used for business, so ask your insurance agent about an incidental business rider or a small-business policy. (An Aetna rider, for example, costs $8 per $1,000 of coverage annually.) It might also be wise to inquire about liability coverage if you bring clients to your home, since if one of them falls and breaks a leg, your home policy won't pay. In spite of the many joys of working at home, perhaps in your bathrobe or on your sun deck, there are disadvantages. Some people won't take you as seriously as you would like, so train your kids not to answer the phone or to do so in a businesslike way. And make sure the address on your stationery, - cards and envelopes does not betray the fact that your office doubles as your residence. To be effective at home, you will also need discipline -- both to get down to business in the morning, and to stop at night. A more personal consideration, but not one to take lightly: many work-at-home people feel severely isolated when they first cut loose from a big office. You will need to cultivate the habit of arranging lunches, visiting clients and keeping in touch with the grapevine. Perhaps most important, make sure your home career will go smoothly for the entire family. Spouses and children should understand not to interrupt when you're working, but you must consider their needs too. Thomas Miller finds this one of the most rewarding aspects of home employment. ''It's nice that my kids see what I do,'' says Miller. ''It reminds me of old-style farm life.'' Moreover, as anyone baffled by the convoluted instruction booklets that come with those new electronic gadgets can testify, it helps to have a kid around when you need one. ''I had to figure out how to install my fax phone and program my computer,'' says Miller. The solution? ''My 12-year-old son David did it for me.''