When you do your own books, what tax deductions do you make? Are you claiming everything you could, or is too much of your hard-earned money falling into the tax coffers?
Research shows that there are around $1 trillion dollars worth of unclaimed business deductions in the US. In New Zealand, that number won’t be quite as dramatic, but as a business owner, you should be trying to keep as much of that money in your pocket as possible.
On the other hand, while many businesses aren’t deducting everything they’re eligible for, some business are trying to get away with crazy tax deductions, including the cost of weddings, takeaways when they’re too tired to cook, and doggy daycare.
While you should never try to make deductions for things you’re not eligible for (and trust me, we’ve seen it all), there are many tax savings you could be missing out on by doing your own books. Here are just a few of them:
Home office expenses
As a bootstrapping entrepreneur, you’re probably trying to cut costs wherever you can, which means working out of a home office, instead of hiring a space. You can actually deduct a percentage of your household bills – including mortgage interest, rates, power bills, phone and internet, insurance and maintenance costs – and save even more money. Getting your home office expenses right will result in a huge tax saving.
If you rent (rather than own) a piece of equipment needed for the running of your business, that rental is a valid tax deduction.
Advertising and marketing software
Many businesses make use of software such as CRMs, marketing programs, website builders, and email marketing software to help track and convert leads. Along with traditional marketing efforts like advertisements, subscriptions to automated marketing services are also deductible.
Business travel, meals, and entertainment
If you need to travel for your business, you can write off the costs of events, meals, travel and accommodation. In order to qualify for this deduction, your trip needs to be related to your core business. If you mix business and pleasure on the same trip (hey, we don’t judge!) we can help you figure out how much you’ll need
If you’re entertaining clients or taking your team or a customer out to a meal, then you can deduct some or all of the cost. Entertainment costs can either be 50% or 100% deductible, depending on the circumstances – and some of the rules can be quite complication (for example, if you take a client out for coffee, this is fully deductible, but if you book your clients a corporate box at the rugby, this is only 50% deductible.
In situations like this, it’s great to have an experienced bookkeeper on board to help you figure out what you can deduct.
Do you sometimes pay for coffee for clients or printer cartridges while you’re out-and-about? Are you just paying for these out of your personal funds, or do you carefully keep receipts and make sure you deduct each one?
Too many business owners think it’s too much hassle to keep track of reimbursements, especially when they’re usually only small amounts. But small amounts add up.
At Make Change, we have a great app that makes it easy for you to track receipts for reimbursable expenses.
Don’t let the taxman run away with more of your money – it’s time you got serious about making tax savings by claiming all your expenses. If it sounds like too much hassle, then why not take the stress off yourself and get a bookkeeper on board?
At Make Change, our philosophy is “humans where you need them. Software for everything else.” We’ll give you a monthly update on the facts and show you want to do to improve your financial health. We give you step-by-step answers to your financial questions, and we provide you with that year-round visibility that’s so key to entrepreneurial success. Go on, book a meeting to talk to the team at Make Change about your business needs.