10 small business tax deductions
Ok, you’ve just started in business, you have not yet approached an accountant and you’re wondering what expenses are deductible for tax purposes? In this post I list off ten items that you can set against income for the purpose of calculating tax. I am trying to be as general as possible, but you might want to check the rules with your local tax authority in your country. I’ll assume you’re a sole trader and you operate your business from home.
1. Phone and internet – if you operate from home the best thing is to have a separate line for business calls. This is fully deductible, as is a mobile phone used for business. If you don’t have a separate line, estimate what portion of the costs are personal versus business.
2. Advertising – any ads in local media are fully deductible
3. Motor expenses – if a vehicle is used purely for a business (like as delivery van) all cost are deductible. If you use your own car, the best thing is to keep a record of trips you do as apply a rate per mile/km. You could also estimate a proportion if business use, but don’t over do it
4. Any professional fees i.e accounting or book-keeping charges
5. Interest on borrowing for the business
6. Wages, rent, insurance stationery and other such costs
7. Donations to charity – up to a certain limit usually
8. A portion of the cost of capital items such as vehicles (used for the business only) or equipment. These are usually called capital allowances or tax depreciation. If an asset is leased, you may be able to claim the full amount of lease payments
9. The cost of training – an employee or yourself
10. Travel expenses like hotels, flights etc, once for business purposes
Of course, this is not an exhaustive list. The best advice is to keep proof if all expenditure and ask your accountant if in doubt.