Running a business can be bewildering at the best of times. But, come tax time and the fine print gets even more confusing!
Knowing exactly which things you can and can’t claim back can help things run more smoothly at “that” time of year. Plus, it’s always nice to save yourself some much-needed coin!
Not sure if you can claim for your new hair cut or that lunch you had with a prospective client?
Read on for some insight into your business expenses. You might be surprised at the things you’ve been missing out on!
Can I Claim Those Expenses As Business Expenses?
Working From Home
If your home doubles as your office, you can claim some – but not all – of your household expenses. That includes rent or the interest on your mortgage payments, land and water rates, home and contents insurance, power, phone, and internet bills.
But you can’t claim everything and get all those hours of Netflix binges for free, unfortunately! Generally, what you can claim is calculated according to the proportion of the house you use for your workspace and business storage.
For example, if you have a 100 square metre house and you use 10 square metres for your home office, you can claim 10 per cent of your rates, mortgage interest payments (or rent), and power bill.
If you have a dedicated business phone line, you can claim 100 per cent. However, if you use the phone line for personal calls too, you can only claim 50 per cent. The same goes for your internet bill. You can claim back the business-related aspects only.
Vehicles, Transport, And Travel
If your personal vehicle is also used for work, you are eligible to claim back some of your expenses. That includes repairs, maintenance, petrol, parking, and other running costs like WOFs.
Make sure you keep a detailed logbook to track your business mileage so you can present accurate records as proof!
If you are heading into an office from home, that doesn’t count as a business travel expense. But, costs to travel to a conference, business meeting or to pitch a client can be claimed back.
Clothing
Got your eye on a snazzy new suit and hoping you can recoup some of the costs? Afraid not. Even if you only use that suit for work, it can’t be claimed. The only clothing items that can be claimed are uniforms or PPE (personal protective equipment like workboots etc.)
Entertainment Expenses
This is quite a complicated area, but important to know if you often take clients out for lunch, have team bonding dinners, or want to buy a thank you gift basket for a customer.
While some entertainment expenses can be fully deducted, others may only be 50 per cent.
If you are hosting a social event (whether at your place of work or off-site), you can only claim back 50 per cent of the costs.
It’s helpful to know that while food and drinks are usually only 50 per cent deductible, non-food and drink gifts may be fully tax-deductible. The IRD breaks it all down here on their website.
- Business magazines: yes.
- A fresh haircut: no.
- Depreciation on your laptop: yes.
- Your tuna sandwich in the office: no.
The list of deductibles is a long and complex one, but it’s worth investigating.
But, you don’t want to be trawling through the fine print yourself. Instead, save your time and energy by chatting with someone who already knows the rules inside out.
Hint: that’s us here at Admin Army!
We have lots of bookkeeping expertise and work alongside some amazing accountants. That means we can make some recommendations on how you may be able to save some money come tax time.
Get in touch with us today to find out more.