Claiming Expenses: The Right Way
You’ve probably heard about claiming expenses over and over since you started your limited company and became a director. But you might be wondering why you would claim for expenses; doesn’t it just reduce the profits you show in your accounts?
Well, yes. That’s what it does. But if you are actually incurring the expense in the first place – it is in your interest to file them correctly.
You see, by expensing those costs that you have incurred because you’ve been running your company will reduce your tax burden – by reducing your profits. Lower profits mean that you have to pay less corporation tax and could mean a better take home pay for you.
What Can I Expense?
There are certain costs that are fairly obvious when it comes to expenses, things like:
- Advertising and marketing
- Stationery + equipment
- Office rent
- Fuel for travel
- Mobile phone bill for business use
But there are a few that are less often spoken of.
Less Common Expenses
Your home office can be an expense. There are two ways to go about this. You can either use the flat rate of £4 a week, or you can go through the second process which involves a little more head scratching. You’ll need to work out what percentage of your property is used for the business, what proportion of the utilities are attributed to the business and how long you use the home office for each day.
If you use an accountant or solicitor (which is quite likely) you can expense their fees – so long as it’s just for the business.
It’s likely that you are the business – without you, things would grind to a halt. Training courses are never a waste and should be expensed.
There are so many things that can and should be claimed as expenses, for further guidance and to cut through all of the confusing information out there – get in touch with us now.