Dele AroRunning a small business is tricky enough as it is and unless you’re also an accountant, it’s often confusing knowing how to deal with expenses and tax benefits.
When there is little economic growth, it is more important than ever to make sure you claim back on what you are entitled to, to ensure that there is a stable future for your company. For smaller businesses that rely heavily on a few key members of staff, this is particularly true.
Thankfully, there are special rules and regulations in place to ensure that your business takes home as much as possible through tax allowances.
Of course, these are strict and will be applicable dependent on industry. For example, a brand new wardrobe may be relevant and beneficial for a small fashion company, but will not be valid for tax breaks for a construction business.
But, first things first. Before you can claim anything at all, you will need proof that you have parted with your cash, so keep hold of your receipts. Keeping records of everything can be daunting but if you want tax relief, this is a small price to pay. Chances are you will be asked to provide evidence of your spending before gaining entitlement to benefits.
The more knowledge you have on which areas to claim on, the fewer hours you require from an accountant, meaning an additional saving.
However, when in doubt, an accountant can advise you, or if you’re really not confident in this area, particularly if you’re a start-up business for which this may be quite a new concept, an in-house accountant could be your best option.
What expenses can I claim on?
What you can claim on will of course depend on your type of business. If you are not a limited company, you only get taxed on your profits. Make sure you claim for everything you are entitled to. The more expense requests you put in, the less your profit margin will be, meaning you will be taxed a lesser amount.
Items that can be claimed on include but are not limited to:
- The cost of goods or equipment necessary for business to continue
- The rent of your premises
- Bank charges
- Cleaning costs
Unfortunately, employees cannot claim for travelling between home and work, but travel expenses can be claimed at 45 pence per mile if you’re using your own car for business purposes.
For those who have a very small business and work from home, there is an option to claim some costs for your home outgoings such as lighting, heating and even council tax. This, again, is strict and will depend on the number of hours these are used for business purposes.
Did you know…?
What many small businesses don’t know is that they are also able to claim tax relief on advertising, postage and stationery. If you calculate how much you spend on these items annually, which in an office could be substantial, tax relief in these areas could be a huge saving, and in the case of a small business, it could be the difference between expansion and loss of earnings.
Do you have any questions about small business expenses or any other financial matters? Ask away – we will do our best to have an expert answer them or cover the topic in a future post![Image: FreeDigitalPhotos.net]