Tax Return Made Simple Series – Busting Challenge No.8
The following is a sample extract of an unedited draft chapter of our forthcoming book, Tax Return Made Simple which addresses each of the 12 challenges that stop most business owners from doing their tax return and their accounts.
Solution: Knowing what to claim and spending money on all the right things
As I mentioned in the previous chapter, it’s important that you understand what you can and cannot claim. This is where having an accountant who understands your business, even if it’s someone you only see every occasionally is useful. I appreciate most small business owners feel they can’t afford an accountant, however know that on most occasions their costs can give you peace of mind over your tax return if you have any doubts and may even save you money on your tax return.
A good rule of thumb is asking yourself if you would have spent this expenditure if you hadn’t been in business. If yes, you would have bought it anyway, then it’s highly unlikely it’s allowed to be claimed in your business. If no, then it’s more likely it can be claimed but it still must meet the following criteria:
Has this expenditure contributed to my business?
Have I received any income directly (or indirectly) from this expense?