Running a business is a challenging task for every business owner, whether they are startup business owners or have experience in the industry. Various factors are responsible for a successful and unsuccessful business. You need to identify different opportunities to grow your business while cutting down unnecessary expenses. For every business owner, tax season is quite challenging and stressful, but if you have expert taxation accountants, then the tax season will become easy and stress-free for you. In today’s blog, we’ll discuss common types of tax deductions that businesses can claim to save money on taxes. Let’s get started:
What Tax Deductions You Can Claim?
Your business is eligible for claiming tax deductions for most expenses that are involved in running your organisation. Generally, the idea behind claiming tax deductions is that you can reduce the income you need to pay as tax. Take a look at the following three golden rules for what the ATO accepts as a valid business deduction:
- The cost has to be associated with running your business, not for private use.
- If the cost is involved in running a business and for private use, then you are eligible for claiming the portion you invest to run a business.
- You must have records as evidence to prove it.
You may not know about these rules, so in this case, it is required to take help from a tax agent Melbourne because they keep themselves updated with new tax laws along with tax deductions for businesses so they can benefit businesses by saving money. If you don’t have a tax accountant yet, then you need to hire one so you can claim tax deductions during tax season.
What You Can’t Claim?
Some expenses are not deductible, such as:
- Traffic fines
- Entertainment expenses
- Domestic expenses, such as clothes of a family or school fees of children
- Costs or expenses associated with earning income that is not assessable
Apart from claiming tax deductions, it is important to keep your records organised so you can make the tax process easy for your tax advisor. And, it can be done by a professional bookkeeper. Bookkeepers of Melbourne are experts in organising the financial records of a company.
When is the Right Time to Claim Your Deductions?
Well, it completely depends on the types of expenses, such as capital expense or operating expense, when you can claim your deductions. You can claim:
- Operating costs in the year you incur them, such as office supplies and salaries.
- Capital expenses over a longer period, such as machinery and equipment. However, under the present temporary full expensing rules, you may be qualified to claim an instant deduction for the business use part of depreciating assets you purchase for your firm.
You can look for a tax accountant near your location by searching for ‘tax accountants near me’ and in this way, you will get a list of tax professionals in front of you.
Types of Expenses You are Allowed to Claim as Tax Deductions
The following are the most common types of expenses that you can claim as tax deductions:
- Motor vehicle expenses
You can claim expenses for motor vehicles like cars and other vehicles that are used to run your business. You can claim:
- Repairs and servicing
- Fuel and oil
- Lease payments
- Interest on vehicle loan
- Insurance cover premiums
- Home-based business
You can claim home-based expenses if you run some or all of your business from home. The following are some home-based business expenses:
- Occupancy expenses include council rates, mortgage interest or rent, house insurance premiums, and land taxes.
- Running expenses include decreasing or declining in value of plant and equipment, electricity, phone, cleaning, furnishing and furniture repairs.
- Business travel expenses
You are eligible to claim business travel expenses, such as:
- Meals, if you stay overnight
- Bus, taxi, tram, train or ride-sourcing fares
- Car hire fees and expenses you incur when you use a car for business
- Digital products expenses
You can claim expenses for the digital products you use to run a business. There are two types of expenses you can claim, such as capital expenses and operating expenses. Operating expenses include cloud storage, lease payments, fees of internet service providers, software subscription fees, the cost of running a website, and file-sharing services. Capital expenses include tablets and mobile phones, computers, POS machines, in-house software, connectivity boosters, cost of developing or acquiring a website.
- Staff’s wages, salaries and super contributions
Generally, as a business owner, you can claim tax deductions for salaries you pay to the staff and super contributions you make to a complying super fund or retirement savings account (RSA) for your staff and contractors.
- Repairs, maintenance and replacement expenses
You are eligible to claim tax deductions for costs for repairs, maintenance, and replacements, such as:
- Conditioning gutters
- Mending leaks
- Repairing machinery
- Repairing electrical appliances
- Maintaining plumbing
If you don’t have enough time to look after these rules and regulations to claim tax deductions, then you can take help from a tax accountant Melbourne because tax professionals carry a wealth of knowledge regarding taxes.
Now, you have an idea of what tax deductions you can claim for your business during tax season to save money. Despite this, you can hire a tax accountant for these tasks to help you know what tax deductions you can claim. You can also reach an Accountant Melbourne to get detailed information about tax deductions.