Small businesses, start-ups in particular, often miss out on the substantial savings that can be made by claiming business expenses. Whether a business owner simply doesn’t know what to claim for or doesn’t want to risk handing in an incorrect return; many small businesses miss out until they seek professional accounting advice. But this needn’t be the case. Here’s a list of business expenses that you should claim.
Personal Expenses: Telephone and internet bills that have been generated through business use are tax deductible. What many small business owners who work from home are not aware of though is that you can still claim for a percentage of the bill even if it is your personal, home connection; you may need to provide proof of your usage though. If you subscribe to any magazines or periodicals that help your business then you can also claim these as a business expense. Membership fees and dues to relevant clubs and societies can also be claimed against the business.
Office Costs: If you rent professional office space then you can claim this as an expense. Any utility bills generated through business use, gas and electricity for example, are also deductible. If you need to replace your office furniture at any time throughout the year this is also a legitimate claim. Any repairs to fixtures and fittings within your office should also be deducted.
Home Office Expenses: Most expenses related to your home office can be claimed. There are two categories of expenses: those that relate solely to the home office (100% deductible), those that relate to the whole house (a portion of which is deductible.) Common deductible expenses include heat, electricity, mortgage interest, property taxes and repairs and maintenance.
Office Supplies: This is perhaps the most overlooked cost from a small businesses point of view. Think about how much you spend in a year on pens, paper, pencils, printer ink, paperclips and postage stamps. These may be minor purchases but add them together and you can save quite a handsome figure by claiming them as a business expense.
Vehicles: Vehicles which are used for both personal and company use can’t be claimed against themselves but you can claim for fuel used. Claiming for business fuel is a little more complicated than other claims because the amount you can claim depends on what type of vehicle you are driving and how many miles you cover in a tax year. Taxis and car services can be claimed as a business expense. Hybrid vehicles and other eco-friendly cars get various tax breaks too.
Food: Any meals that you have to eat because you are out of the office on business are claimable. There are regulations monitoring “reasonable” use here so be sure you are only making legitimate claims.
If you are not claiming any of the above business expenses, you could be leaving money on the table. Every penny your business saves contributes towards future productivity. If you are unsure about any expense claims then check with your CPA or a small business accountant. And remember the golden rule: always keep your receipts.
About the author: Kevin Ball is a writer for The Accountancy Partnership; a company that specializes in accounting services for small businesses and the self-employed.
Great post. I would add that another often overlooked business deduction is in the area of start-up costs and organizational costs, which can be significant. A few examples of these types of costs include travel, meals and lodging for business-related training; or legal fees incurred to form the new business entity. Because the majority of these expenditures are incurred prior to the opening of the business, and because business owners often pay many of these expenses out of their own pockets, these transactions have a higher tendency to “fall through the cracks.” To maximize tax deductions for start-up costs and organizational costs, keep track of all pre-operational expenditures (a simple list of payments by date, vendor, and $ amount will suffice), and be sure those expenses are subsequently recorded in your accounting system.
Managing a business enterprise, requires a total recording of the expenses, and a proof of the happenings, to portray a dependable account balance sheet, to claim all financial rights, accruable to the workers.
This speeds the operation, function, and progress, of the organisation, with no costs, being left behind.
Good idea, and on the target.
Thanks.
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