Budgeting and financial planning are some of the most significant issues for small business owners just starting out. The situation is made even worse by the fact that many new entrepreneurs have no idea what they can list as an expense on their tax bill. That means new companies stand to pay too much tax if they make mistakes, and that can result in a lack of funds for things like marketing and promotion. Considering that, this post will list some of the most common expenses you can record on your tax return. Hopefully, the info will help to make sure you never pay too much tax, and you stand the best chance of success.
Legal and financial costs
According to HMRC, small business owners are entitled to claim for legal and financial costs when submitting their tax returns. That includes the cost of hiring accountants, solicitors, or surveyors for business reasons. It also includes the premiums you will have to pay for professional indemnity insurance. Listing that spending will help you to keep more cash in your accounts in the long run. If you have any concerns about legal or financial costs; your accountant should manage to point you in the right direction and provide accurate information. If you can’t afford to employ a professional bookkeeper during the early stages of your venture, there are plenty of expert business advisors who can help.
Tools, property, and equipment
Depending on the nature of your operation, there is a chance that you will want to claim for tools, property, and equipment. Let’s presume you’re a plumber who uses 8mm stainless steel tube when fitting showers and other items in the bathrooms of your customers. While you can claim for the cost of the shower itself; you can also place any items you needed to purchase to complete the job on your expenses list. The same goes for people in any other industry. If you run an office and you need to buy new computers; you can knock their price off your tax bill.
Car, van, and travel costs
The government and tax authorities understand that many business owners have to travel extensively to secure success for their ventures. So, it’s handy to know that all travel costs count as expenses when recording your tax information. That means you can include the price of hiring cars, booking taxis, or anything else that gets you from A to B. You just need to make sure you always ask for a receipt and keep it safe until you arrive back at the office.
It’s possible to record lots of other expenses on your tax forms including clothing, staffing costs, and marketing spending. Now you know the basics; you should be in the best position to ensure you don’t make mistakes or get into trouble with HMRC. If you fail to record all your expenses; you will end up paying more than your fair share of tax. That is a terrible idea because you could use that money to help fund growth and expansions into new markets. You could also use it to relocate your company to a more favourable location. So, get it right!