Aside from landing new clients and improving your small business, you might be looking into other forms of growth. This may require putting a list together of possible investments or tax deductions for consideration. An accountant can tell you which deductions your business may qualify for. However, before you get into deductions, be sure to invest in some form of protection for your business. If you’re unsure about the type of insurance you have, there are plenty of sites that provide this information (see VitaAssure group insurance).
Travel & Subsistence
Suppose you need to go on a business trip. You could:
- Go, coach, eat cheaply and book a cheap motel
- Fly business class, eat a slap up meal at a 5-star restaurant and stay at the Ritz
Both of these travel costs are fully allowable and expensed, it’s up to you how you chose to proceed. Yes, one is still more expensive at that moment, but at least half of what you’ve spent is on the government, and wouldn’t you rather they pay for the steak than the burger?
Child Care
Tax relief for childcare costs can be very generous depending what country you reside in. If you have a few employees, it might be worth considering a creche facility for their children. It would be tax deductible, and there’ll be no taxable benefit to you if your own kiddos use it.
Loans and Overdrafts
For the most part, if you are personally incurring interest then you can expense those, however, if there interest on a business account that is overdrawn, or on loans pertaining to the business – usually, there is an allowance there. This is one to discuss with an accountant to make sure you don’t get muddled up between the two.
Phones
If you are a sole trader or a partnership you can claim the costs of business calls both on your home line and on your mobile phone contract. Line rental can have a % claimed, or the full cost if it is a line used only for business. You can also use the company to buy you a mobile phone, without any taxable benefit in kind occurring.
Family and Friends
If you were hoping to find the expenses on your mother in law, you’re out of luck… unless she works for you. If any of your family members happen to work for you, or provides consultancy, or some commissioned work, you may pay them an appropriate wage and claim it as a business expense. For example, your eldest son takes calls on the home phone, that relate to your business – expense it! Depending on the circumstances some, or perhaps all of that wage will be tax-free. This relies on the tax law for personal allowance.
Vehicle
If you have either a sole trader or partnership as your legal business status, you will be able to deduct a portion of the running costs. Insurance, gas, road tax, repairs, and maintenance are just a couple of the things that you can claim. Oh, and mileage. If you are thinking about trying it for a regular home to work travel, then don’t bother. That type of trip doesn’t count as business costs. You may also be able to claim capital allowances on the car. For example, a new car would give you a year of allowance on the purchase, even if you buy it on the last day of the current business accounting period – great hey!
Home
When you work from home, it stands to reason that a portion of your bills might be expensed. But, what are we looking at here? Well, heating and light are a given, but have you considered your council tax too? What about the spare room where you do some of your paperwork sometimes? Interesting? Well, it would be worked out like this:
You keep some of your business paperwork in a spare room, but nothing else. Or you have an extra room, and there might be a bed in there that someone uses once in a blue moon (very, very rarely) but you tend to file and sort in there most evenings. If you lived in a 4 room house, then you’ll be looking to expense up to 24% of your household bills as a business expense. Why? Well, you use one room over 90% of the time purely for business purposes.
Pension Contributions
You can get tax relief from pension contributions by sticking with all the relevant guidelines and contribution limits. You will get relief on personal contributions or those you make a sole trader or partnership. It is worth remembering that if any of your family work in your business, this will go for them too.
Home Office
This one is a little more specific to the place you are working in and call an office, or a business premises. Painting, wallpapering, some structural work will all be on the allowable expenses list. Any area that is going to be seen by a customer and the attractiveness of it will matter you could even expense some ornaments and paintings. As long as you can make a business case for the items and the cost of the decorations, and understand that large pieces will likely attract relief under capital allowance systems. This can be one of the most significant deductions you can claim so make the most of it.
Finally
There are many more areas in which you can claim some deductions, but in general, you will find the ones above as the most generous and worthwhile. As always, you should speak to a qualified accountant, and give them your paperwork and receipts to go through.
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