Running a business is a demanding job, so it’s no wonder owners lose track of crucial things at tax time, such as:
Deducting entertainment expenses
Dinner and lunch meetings with clients and customers are partially tax deductible. Keep your receipts and check in with us to see which meetings can be deducted.
Bear in mind that the treatment of meal expenses incurred by self-employed people differs from the meal allowances afforded to employees. We can clarify this for you.
If you want to keep the cost your accountant charges to a minimum, then don't scatter these costs across a wide variety of classifications. Develop a discipline in classifying these costs.
Apply the following approach:
Entertainment i.e. the social side of business
Meeting Costs i.e. tea & coffee
Travel Costs i.e. out of town meals, and accommodation, excludes Entertainment
Staff Costs i.e. costs associated with your team, and excludes Entertainment
General Expenses i.e. try not to use at all, but if you have to don't put entertainment here
Employee Benefits i.e. gifts for the team, car parking
Subscriptions and memberships
If keeping up with your industry via specialist magazines or newspapers helps you in your work, you may be eligible for a tax deduction on subscriptions.
Claiming home office space - Company Shareholders & Directors
A company can not claim a deduction for home office expenses, unless it has incurred the actual cost. So if you want to make a claim this should be calculated and paid before year end.
Claiming home office space - Sole Traders & Partnerships
If you work from home, you can claim a portion of your mortgage interest payments, rent, rates, utilities bills and insurance.
You’ll need to provide information on how many square metres your home covers, and what percentage of that space is used for work. If you’re a tradie who uses garage space, you can claim that, too.
Shareholder Advance Accounts
If you take drawings throughout the year, and your accountant puts through a salary as a reflection of your services at year end, then if profits are down it is likely that your salary will be reduced.
So if you have taken more funds out than funds available, creating an overdrawn shareholder advance account, then your accountant will need to calculate interest on this benefit you have received. If you don't want to be charged interest, then talk to your accountant whether you need to inject funds or declare a dividend before year end.
Shareholder Dividends
Are you planning to withdraw a significant amount of funds from the company next year? Or are you planning a large personal spend and aren't sure how you'll finance it? Then have a chat with us so we can work out together whether you can draw cash directly from your shareholder advance or if a dividend should be declared first.
Keeping records
When it comes to records and receipts, keep everything. You won’t be able to claim any of the above if you don’t have proof to back it up. Click here for your handy reminders.
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