Accounting 101: An Overview on Tax Deductions for Businesses
Running a business requires you to be adept at different aspects of your business model. This includes familiarizing yourself with various business processes, from marketing your product to filing your taxes. Unfortunately, the world of accounting and bookkeeping can be hard to track without the right knowledge of tax laws.
An Overview on Tax Deductions
Being a business owner takes a lot of determination to ensure that all parts are working properly. However, you can prevent your enterprise from growing if you’re not aware of the best ways to optimise your business. For instance, not knowing the potential inflows to your revenues stream can hurt your company’s overall profit margins. For this reason, you must understand the basics of tax deductions.
In this article, we’ll cover three things you should remember when filing tax deductions.
1. Travel Expenses AreTax-Deductible
To put it simply, businesses can get a tax refund for all the expenses they need to spend on. However, you need to confirm and categorise the expenses you have. For example, travel expenses can count as an overhead cost to your operation. This includes the following transportation services:
Train, bus, or airfare tickets
Public transportation through taxis
Car hire fees, parking expenses, and road tolls
Additionally, dry cleaning and laundry services can qualify as travel expenses. This also applies to accommodation for private rentals or hotels. Just be sure that all these costs are justifiable as part of your everyday operations.
2. Meal Expenses Are Tax-Deductible
Besides travel costs, your everyday meals are tax-deductible. You’re entitled to receive a 50 per cent refund on your company’s meal expenses. This considers food bought for your staff or coffee meetings with employees, business partners, and clients.
Keep in mind that grabbing lunch for yourself doesn’t count as a tax-deductible expense. Also, remember that your purchases need to be purposeful and traceable through your books and ledgers.
3. Utilities and Supplies Are Tax-Deductible
Even your monthly utilities are tax-deductible if you have your own office space. Phone, internet service provider (ISP), water, and electricity bills are all refundable if you file the proper paperwork. Additionally, any costs of paying for internet at home for home-based employees and internet at hotels are refundable.
Besides service expenses, it’s only natural that supplies can be written off. However, you need to ensure that these tools are necessary to maintain your business’s operations. For example, dinnerware or disposable utensils count as supplies for restaurant businesses. Another example would be art supplies and textile materials for craft stores. This ruling also applies to digital properties, like fonts, website themes, stock photos, and software subscriptions.
It can seem a lot to monitor every little thing that you do for your business. However, it’s a strategic method of cutting down expenses. The more accurate and consistent your books are, the more money you can save through tax-deductible purchases.
All these small instances can rake up a substantial value by the end of the year, leading to a higher profit margin for your company overall. Unfortunately, knowing which expenses you can or can’t claim gets tricky once you’re heading to the specifics. If you don’t have the determination to sift through and track all these interactions, you can hire a professional accountant to create an organised process you can follow.
Knowing the different accounting processes of operating a business can be too much for a growing company. This is why our team at New Wave Accounting is dedicated to building partnerships with aspiring business owners. We can handle your finances better so you can focus on your company's growth. If you need reliable bookkeeping services in the Gold Coast, contact us today!