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One of the major benefits of running a company is having the opportunity to claim expenses. This can save you a great deal of money with your tax bill. With that in mind, a lot of people get the wrong idea when it comes to business expenses, and if you want to make sure that you’re not one of them, then take a look below.
Claiming All Food and Beverages
You would be surprised at how many small businesses believe that you can claim all the food and drink that you consume during the day. Sure, everyone has to eat to live, but this isn’t an expense that always relates to business. The only real exception here is if you are going out of your normal working pattern. It may be that you are traveling to meet a client in a different city for example.
Overdoing Motor Expenses
All companies are eligible to make claims when it comes to travel costs. If you use the same car for your personal journeys as well as your work journeys however then you are only really eligible to claim a small percentage. If you want to help yourself here then you need to break down how often you use your car for personal use and how often you use it for work use. Calculate the hours and then work out a percentage based on that. If you can do this then you will be given a concrete number that you can use to claim.
Not Keeping Track of Purchases
Estimating how many purchases you have made will work against you when it comes to your expenses. The chances of your small business being inspected might be small, but with that in mind, you do need to make sure that you meet the right regulations. Keep your receipts and make sure that you document any online purchases too. If you work in the medical industry, it may be that you need to pay out for medical supplies and pharmacy fridges for example.
Claiming for Clothes
You also need to make sure that you do not claim for clothes that might not be work-related. If you are going out to meet clients then you will probably want to dress up for it. With that in mind, you cannot claim for a new suit if you plan on wearing that new suit for a wedding the week after.
Claiming for Commute
You also can’t claim for a normal commute. You can only really claim for transport costs that arise from traveling to work-related duties. You can’t claim for the cost of traveling to work in general. If you need to go and meet a client somewhere then this is perfectly fine to claim for, but be mindful of the fact that you shouldn’t be claiming too much or it will work against you if you are ever inspected.
If you are ever in doubt about what you should be claiming for then make sure that you talk with your accountant as they will be able to give you some guidance.
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