Surviving in this new era is quite challenging with minimal wages as the prices of everything go up every now and then. To help with living expenses in this generation and to aid the existing income, starting a new business might be a brilliant plan but intimidating and risky at the same time. Owning a startup business makes you self-employed which can help you quite a lot when it comes to taxes. Starting a business can be quite a risky experience so it is important to be aware of the subtractable expenses to save some money in the process which will boost the net worth in the end of the year.
The golden rule to keep in mind is that only the direct operating expenses incurred while running the business to earn an income are deductible. For the semi-direct operating expenses that are both personal and work related, only the percentage that is used for the business can be claimed.
Some operating costs that are usually deductible include:
- All direct business operating costs
- Vehicle expenses
- Travel and entertainment costs
- Raw materials and office supplies
- Bank charges, Business interest and Insurance
- Shipping costs
- Wages and Salaries
All direct costs are usually deductible but for semi-direct items for example a telephone that has been used for both personal and business use, only the percentage used for business is claimable. In a house that is also a home office, the area of the home used as an office can be calculated and only that percentage is claimable. Meals and entertainment costs are only subjective to 50% and the depreciation on the fixed assets purchased for the business is claimable as well. And much more.
It is quite important to keep track of the taxable items and items that are qualifiable for tax returns. It’s more important for small businesses to keep track of everything as all these small costs which add up at the end of the year. Any way of tracking can be used if the data is up to date and consistently recorded. You can hire a professional accountant for more tax efficiency which you are not aware of.