The following is a sample extract of an unedited draft chapter of our forthcoming book, Tax Return Made Simple which addresses each of the 12 challenges that stop most business owners from doing their tax return and their accounts.
Challenge 8: Not knowing what to claim and spending money on all the wrong things
Solution: Knowing what to claim and spending money on all the right things
As I mentioned in the previous chapter, it’s important that you understand what you can and cannot claim. This is where having an accountant who understands your business, even if it’s someone you only see every occasionally is useful. I appreciate most small business owners feel they can’t afford an accountant, however know that on most occasions their costs can give you peace of mind over your tax return if you have any doubts and may even save you money on your tax return.
A good rule of thumb is asking yourself if you would have spent this expenditure if you hadn’t been in business. If yes, you would have bought it anyway, then it’s highly unlikely it’s allowed to be claimed in your business. If no, then it’s more likely it can be claimed but it still must meet the following criteria:
Has this expenditure contributed to my business?
Have I received any income directly (or indirectly) from this expense?
If your business has benefited from the expense, but so have you personally, then often only a percentage (in relation to business/ personal use) is allowable.
One example would be your broadband at home. In this modern age, most people have broadband at home thus the cost of such is not a business expense. If however you had to upgrade to the faster download package due to our business then the increase in cost would most certainly be a business expense. If you took advantage of this faster download and used it to download films then only a portion of it would be allowable.
Furthermore HMRC have great guidance on their website and they will be happy to take any calls you have. Please don’t ask other business owners. Every business is different. Get your own accountant, finance coach or phone HMRC.
Overcome the avoidance of looking at accounts
End of preview.
To read more, sign up to receive the FULL preview HERE. Only available until 25th November! By receiving the full preview of Tax Return Made Simple, all I ask in return is feedback by 30th November, and if you would some free advertising, a book review for insertion in the published professional edition. Then we hope you tell all your business friends about it.