Also, be sure the employee's homeowner's policy covers damage to company property that is used in the home. If it doesn't, you need to be sure it's covered on your business policy.

It is also very important to be careful about which employee you permit to telecommute. If you let anyone, make sure it is one that is a self-starter, responsible and loyal to the business. Employees like this are not as likely to use privacy of the home office to take advantage of the business or to ignore their jobs.