What Expenses Can Be Put Through My Business?

November is when those early birds start to get their books in order and start ruffling through all of those receipts and paperwork to get the most accurate portrayal for their year-end tax calculations. If you are a sole trader who works from home, it can be tempting to throw in a few of those luxuries you have splashed out on and claim them as a business expense. However, you have to remember that incorrect claims like these can land you in hot water by upsetting your accountant and a big red flag for HMRC.

Therefore, you need to understand what can be claimed as expenses and what can not to better protect you and your future success.

Business Purposes Only

HMRC defines appropriate business expenditure as something wholly, exclusively and necessarily for trade purposes. Wholly and exclusively means you cannot claim this expense if it served anything other than your business purpose.

You cannot claim a week-long vacation if you just happened to meet one client during one of those days as the trip was not exclusively used for your business. However, you can claim specific expenses that are associated with the meeting.

Necessarily is a slightly harder term to define that is open to interpretation. As an example, you may want to splash out on your employees with a few luxuries around the office for a fun work environment, but you will need to get clarification on this from your accountant or bookkeeping services to find out how HMRC view this. How do you think HMRC would be convinced that a giant adult bouncy castle is 100% necessary to running your business? That may end up being a call for your credit card instead of your business card.

What Does Count

Here are some of the costs that can be classed as wholly, exclusively and necessarily for your business.

Purchases to resell such as raw materials and stock and office costs such as stationery, telephones, postage and software and licences all should be collected. Personal fees fall under such services as legal, accounting and any consultations that you have for the business.

Travel costs such as fuel and mileage, parking fees or public transport to and from the workplace count as claimable, and when it comes to clothing – it does not mean that flashy business suit, it means uniforms or protective clothing needed to do the job.

What About Equipment?

Equipment costs such as any computers, printers and office furniture would be claimable, as well as costs of staff which means salaries, pensions and any business related training courses or qualifications. Your business premises will use significant heating and lighting for both the home and the office – and add business rates and any cleaning contracts required too. You can count on bank charges, insurance and any interest also being part of business expense.

Finally, all of that marketing such as business cards, a website and any print ads or other forms of advertising and professional subscriptions are all to be accounted for.

Anything other than these should be run by your accountant and bookkeeping services in Manchester to be sure. Contact the team at Pebbles Bookkeeping today to get everything in line for your end-of-year and be sure that everything is accounted for.