When you’re running your own business, the sheer number of categories of business expenses (from advertising and entertaining to equipment leasing and “sundry expenses).
QuckBooks Self-Employed can help. You can create regular expenses, your own category of expenses and add details to expense claims (for example, explaining the proportion of an expense claim for transport which is business related).
Before business owner Sandra Dowson used QuickBooks she would “pay a fortune” to her accountant. “You’d be landed with a £100 bill each time I saw them. With [QuickBooks Self-Employed], you manage your finances.”
QuickBooks Self-Employed (which has an expense-tracker feature) helps her manage her finances, including her expenses
“When I saw the QuickBooks ad, I signed up for a trial period, found it brilliant,” she says. “It’s a brilliant bit of kit. You can see your weekly turnover and daily turnover.”
Dowson has two parts to her business – “Doggy Day Care” (picking up dogs from their owner’s and taking them for a walk, visit houses when owners away to check on dogs and cats) and “Isabellas Fur Baby Boutique” (coats and accessories for dogs).
It can take accountants months to sort and categorise a bag of receipts. Now, Dowson says she can check an expense instantly if HMRC calls her.
Another Intuit customer, Lisa Pierce, who runs a jewellery business, called Beanstalk Keepsakes, in Bracknell, Berkshire, also uses QuickBooks to organise her receipts.
She creates a “rule” in the QuickBooks Self-Employed expense section for repeat transactions, for example, buying a type of material from a regular supplier, for the business. QuickBooks automatically puts the transaction into the right expense category, she says.
QuickBooks Self-Employed can also help you track business costs. For example, you can create an “expenses report” to show how money flows out of your business accounts and which suppliers you’re spending the most on. (Click the “all reports” tab in QuickBooks, then “review expenses and purchases”, and “expenses by supplier.)
Common types of business expenses include:
- office costs, e.g. stationery or phone bills
- travel costs, e.g. fuel, parking, train or bus fares
- clothing expenses, e.g. uniforms
- staff costs, e.g. salaries or subcontractor costs
- things you buy to sell on, e.g. stock or raw materials
- financial costs, e.g. insurance or bank charges
- costs of your business premises, e.g. heating, lighting, business rates
- advertising or marketing, e.g. website costs
Why business expenses are so important
If you’re self-employed, your business will have various running costs. You can deduct some of these costs to work out your taxable profit − if they’re allowable expenses and for the business only. (If an expense is only partly for your business, for example, a monthly train card that you use outside work in the evening and weekends, you’ll need to estimate the proportion of the expense that is used for work.
You need to tell HMRC about your allowable expense when you complete your tax return. Whether you give HMRC a figure for your total expenses or list your actual expense depends on your turnover and other circumstances, says the Low Incomes Tax Reform Group.
You can claim business expense for:
- employee and staff salaries
- agency fees
- employer’s National Insurance
Marketing, entertainment and subscriptions
You can claim allowable business expenses for:
- advertising in newspapers or directories
- bulk mail advertising (mailshots)
- free samples
- website costs
You can’t claim for:
- entertaining clients, suppliers and customers
- event hospitality
You can claim for:
- trade or professional journals
- trade body or professional organisation membership if related to your business
You can’t claim for:
- payments to political parties
- gym membership fees
- donations to charity – but you may be able to claim for sponsorship payments