Minimising your tax bill at the end of every financial year is something that most small business owners consider a priority. To really maximise your claim, it’s important to be aware of all the different tax deductions available to you. Here are five important deductions that every small business owner should know.
1. Tax agent or accounting software expenses
As a small business owner, it’s important to stay on top of your financial and tax obligations. The best ways to do this are by enlisting the help of a professional accountant or using a dedicated software, such as QuickBooks Online. While these options may cost the business, they can save you money in the long run. And the good news – they’re both tax deductible.
2. Home office expenses
There are a number of deductions afforded to people who are self-employed or who run their business from a home office. Anything that you directly use – whether in part or in full – to work from home is considered an expense incurred to operate your business, which means you can claim part of it as a tax deduction. This can include a portion of your electricity, heating, and internet costs. You can even claim the cost of work-related equipment that you use at home, such as computers, software, and furniture.
3. Vehicle expenses
If you use your personal vehicle to carry out your work, you may be able to claim for costs such as fuel, maintenance, and the depreciation of the vehicle itself. And, while you can’t claim for costs incurred driving to or from your place of work, you can include other necessary travel, such as getting from one job site or office to another.
4. Education expenses
If you’ve paid for any studies or taken any courses related to running your small business, you can claim the expense as a deduction at tax time. This includes any textbooks, stationery, travel expenses, and uniforms you need to complete your studies. Ask your accountant about the five different categories for self-education deductions, as each one determines how much you will be able to claim come tax time.
5. Deductions for financial loss
If you’ve had any bad debts – debts that can’t be collected or recovered – this financial year, you can write it off and claim it as a deduction in your return. This process is usually more complex than other deductibles, as you will need to prove that you made a reasonable attempt to recover from the debt. To determine the best way forward, speak to your accountant about what you should do to minimise the impact of a bad debt.