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Small business expenses – what can you claim?

 

If you own a small business, you probably know all about expenses. But if you’re just starting out, there might be a few things that you didn’t know that you could claim as a business expense. We’ve put together some helpful information on business expenses below for you.

Because businesses get taxed on their income minus any business expenses, you can claim back all or a portion of your expenses. It’s important to keep records of everything, as all receipts, including those for items under $50.00, need to be kept for seven years. A good way to keep track is to take a photo of your receipts and store them online in a secure place.

So what business expenses can you claim?

Expenses you can claim include:

  • vehicle expenses, transport costs and travel for business purposes
  • rent paid on business premises
  • depreciation on items like computers and office furniture
  • interest on borrowing money for the business
  • some insurance premiums
  • work-related journals and magazines
  • membership of professional associations
  • home office expenses
  • work-related mobile phones and phone bills
  • stationery
  • work uniforms
  • tax agent’s fees

 What about entertainment expenses?

Entertainment expenses include any activity involving food and beverage, including client gifts.

You can claim for entertainment expenses, but these are generally only 50% deductible due to the private element involved.

There are some instances where entertainment expenses are 100% deductible if they’re entirely business related, such as meals an employee buys while travelling on business, or food and drink provided at a conference that lasts at least 4 hours. 

There are quite a few very specific conditions for 100% deductible entertainment expenses though so it pays to chat to our accounting team.

What can I claim for motor vehicle use?

Vehicle expenses can be claimed based on the amount of business use compared to private use.

If you’re a sole trader, you have two options for claiming motor vehicle expenses:

  1. Mileage claim – keep a logbook to track all business use. At the end of the year, you can claim the mileage at 79c per kilometre for the first 14,000 kilometres.
  2. Claim actual costs – keep track of all running costs, including petrol, Warrant of Fitness, maintenance, insurance and registration. You will need to keep a logbook for 3 months to determine the business use vs private use – this should include the start date and odometer reading on that day, the date, distance and reason for each business journey, and the end date of the 90 day period and the odometer reading on that day.

For motor vehicle use, you can’t claim things like parking infringements or speeding tickets.

What about my home office?

If you use an area of your home for your business, you can claim a portion of the household

expenses such as rates, insurance, mortgage interest, rent and power.

If you have a dedicated space, you can claim based on the size of the space compared to the total floor space of your home. If the area is used both personally and for business you’ll need to take into account the amount of time spent on your business activities and the area used. Keep a record of these expenses so you can access them easily at the end of the year.

If you’re not sure what you can claim, or you’d like help sorting out your expenses, our friendly accounting team is happy to help! Get in touch with us today.

 

Want to chat about your business expenses?

Get in touch with us!