One of the biggest benefits of running your own company is that you can claim expenses and save money on your tax bill. With that said, many people get the wrong idea when it comes to business expenses. If you want to make sure that things are all working out for you, then take a look below.
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Claiming Everything
One of the main things you need to do is make sure that you are not claiming all of the expenses you possibly can. If you know that you have food and drink expenses, then you need to know that you can’t claim every single bit. Everyone has to eat, but your food expenses should not always be claimed back in full. A good rule of thumb would be for you to consider whether you are doing it for business or for yourself. If you are going out of your normal working patterns or if you are travelling to a different city, then this is one thing, but you can’t claim for a sandwich you might pick up from the local store because you fancy it that day. If you can keep things like this in mind, then you will find it easier to better manage your expenses, so keep that in mind.
Overdoing it with Motor Expenses
Another thing you need to be mindful of is expenses. All businesses are eligible to make claims for their travel costs, but if you know that you are overdoing it a bit, then you need to cut down on this. If you use the same car for your work as well as your personal journeys, then you may only be eligible to claim the expenses that you pay when you are travelling for work. If you can, you have to make sure that you are not making any claims that you would not feel comfortable explaining to a tax inspector. If you can do this, then you will find it easier to get the result you need.
Not Keeping Proof
If you can, you have to make sure that you keep proof of absolutely everything. You need to keep comprehensive records of everything, so if you do end up making a claim, you know you are covered. If you are not going to be investigated, or if you have been investigated recently, you do need to make sure that you keep everything, as this is a good way for you to get the result you need. If you can keep proof of your business and if you can make sure that you save any receipts for things that you might have bought online, this will help you a lot. You may also find that it is easier for you to feel more confident in the expenses you can claim.
Buying Equipment Outright
You also need to make sure that you are not buying equipment outright all the time. If you do, then you are responsible for the maintenance of that equipment, which is the last thing you need. If you want to do something about this, then you need to look into renting if you can. By renting your equipment, you will find that you can cut down on your overhead while setting yourself up for more long-term profitability. Of course, renting equipment is also a very savvy thing to do if you work in the skilled trades business, as it allows you to choose specific equipment that suits different jobs, without having to invest in specialist equipment that you may not get much use out of. It also makes much more financial sense as you won’t have to pay to store the equipment all the time, which is great.
Claiming for Clothes
If you can, you need to make sure that you don’t claim clothes all the time. If you work in construction, and you need safety boots and other related items to make sure that you are safe when on the construction site, then this is one thing, but at the same time, you can’t claim a new suit if you intend to wear it outside of business hours. If you can keep this in mind, then you will find that it is beneficial for you later down the line and that you are also able to feel more confident in the expenses you have. You can also claim for any safety equipment your team may need, too, but at the same time, you should be mindful of how much you claim for this. If you buy it one year, you can’t claim it in subsequent years, so be mindful of that if you can, as it will make a big difference to you.
Not Hiring a Financial Advisor
Another big mistake would be for you not to hire a financial advisor. If you don’t hire a financial advisor, then you run the risk of harming your business down the line. A financial advisor can help you to not only make sure that you are making good decisions, but that you are also putting money in all of the right places. Hiring a financial advisor may be an expense, but you have to remember that you can claim it back at a later date. A financial advisor may also be able to tell you about any business initiatives you may be missing out on, as well as any ways to get some additional loans, but at a lower interest rate. If you can keep things like this in mind, then you will find it easier to get the result you need, and you will also find that it is much easier for you to move forward with confidence.
So as you can see, it’s easy to make mistakes when running a business, but if you follow this guide, you will find it easier to make sure that you are not harming your business by being unaware of the risks you face. If you need more help, having a financial audit done could help you to know where you are going wrong.
