What expenses can you put through your business?
EPISODE 87
Notes
I regularly come up against a lot of confusion around what expenses should and shouldn’t be put through a business. Today, I want to shed some light on this topic so you can head into the holiday season with clarity and set yourself up for a successful year to come.
At the core of running a successful business is understanding your finances, and that means knowing how to handle expenses. Business expenses are costs incurred in the operation of your business. They play a crucial role in determining your business's financial health and you may be eligible for tax deductions on certain expenses.
However, it's not a free-for-all. There are rules governing what can be considered a legitimate business expense. Ask yourself, if the ATO were to audit your business, would all your expenses hold up as business-related? For instance, buying a dress for a photoshoot makes sense as a business expense, but claiming ten dresses over two months for the same photoshoot? Not so much.
The Australian Taxation Office has laid out three golden rules for work-related expense deductibility, and I take you through each one so that you can get clear on what are considered legitimate business expenses. These include things like everyday operating costs, training, product purchases and travel expenses.
Now, it’s tempting to get a little creative when it comes to claiming expenses. It may seem harmless to claim that daily coffee run or a couple of team golf days, however the ATO’s guidelines are there for a reason, and you want to do your best to avoid getting into any sticky tax-related situations. I dive into the types of expenses that won’t pass as tax-deductible, and clarify some areas that can be confusing or tricky to navigate.
When in doubt, consult your tax accountant - this will help ensure your business stays financially healthy and in the clear come audit or tax time.
LINKS:
Previous episode mentioned: Bookkeeping for Christmas parties, Christmas gifts and entertainment expenses
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About the
Author
Bec is a chartered accountant who worked at Australia’s big firms and banks for 15-years. Faced at a crossroads in her career, she backed herself, left her corporate job and launched Straight Up Bookkeeping. 3 years and 5 staff later, Straight Up Bookkeeping is one of Australia’s leading virtual bookkeeping businesses for creatives, with a mission to free business owners from financial stress so they can grow their empires.
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