So you are a small creative business and you are looking to claim a few expenses, but you’re not exactly sure how to go about it… Well, don’t fear as we are here to help. As small business accounting maestros, we are here to make sure that all your expenses are claimed correctly, so you don’t get in trouble with the taxman.
Here is our guide to some of the small business expenses you should have in mind when looking to claim back what is rightfully yours, helping you get your costs written off quicker than an old banger in a five-car pile-up.
First off, what actually counts as a deductible business expense?
There are many different expenses you can claim for, but knowing exactly what you can and can’t claim for can be a little bit of a minefield. To sum it up, there are two types of business expenses, deductible and non-deductible.
Deductible Expenses
If your expense is deductible, then that means that it will be subtracted from your income before the income is taxed. To understand whether an expense is deductible, it has to be spent ‘wholly and exclusively’ for business purposes. But exactly what that is referring to can get a little tricky, and knowing exactly what small business expenses you can claim is a bit of a grey area. So good job you have your trusty accounting friends here at Raedan to give you some insight.
While we can only dream of flying away to an exotic paradise like the Cayman Islands to live tax-free, we are in the UK and taxes, however annoying, need to be paid correctly. If not you will inevitably find yourself in a lot of trouble. We would all like to chuck that brand new whip or trip to the Mediterranean all on the company card, but that is obviously going to lead to some questions down the track. That’s why it is essential you stay on top of your expenses and make sure they are being recorded correctly.
Non-deductible expenses
This type of business expense is one that you can’t subtract from your income at tax time unfortunately. The cost of these expenses will have to be fronted by you and your business and can’t be used to reduce your tax bill. This usually includes things like personal expenses, meals and entertainment for clients, along with legal fees if you find yourself on the wrong arm of the law.
Common Small Business Expenses Claims
Whether you are an agency, a purveyor of the media and arts scene, or operating in the tech or e-commerce space, these are a few small business expenses you can claim.
Phones
It may seem obvious, but as a creative business, you are probably on the go and spending a fair amount of your working day on the blower. Many people don’t think to claim this back as a business expense. But it does add up, and any business calls you are making – plus potentially the phone itself – should be added to your small business expenses – so make sure you are keeping track.
Courses and Education
To stay ahead of the curve in the creative world, you might need to enrol in some professional courses. The good news is these can be claimed back, as long as they directly relate to your business. So if you are a tech company looking to learn more about the impact of AI or a mini media mogul wanting to get some extra training on growing your small business, any course you do to level up your skills can be added to your list of expenses.
Employee Benefits
The perks you offer your employees, from health insurance to childcare schemes, can be counted as deductible expenses. Keeping your team happy and productive could be less costly than you thought and is one of the small business expenses you can claim for. Keep morale high and costs low.
Unplanned Shrinkage
Unplanned losses or ‘shrinkage’ as it’s often termed can be very inconvenient to any business. If you do experience losses from theft, damages, or even administrative errors, these can be claimed as business expenses. Make sure you keep a clear record so you can report your shrinkage correctly to avoid any trouble/disappointment.
Sneaky Fees
Hidden bank charges, payment gateway fees, or other similar costs and fees you forget to think about but do add up. These all are tax-deductible too, so make sure you’re not overlooking them when tallying up your expenses. Want to know exactly what fits into this bracket? Get in touch with our team to find out more.
Payment Delays
Struggling with late payments from some of your clients? While you can’t deduct the late payment itself, you can claim for interest or charges that your business incurs because of it. A good one to consider for those of you dealing with sporadic business partners.
Co-working Spaces
Like many working in the creative industries, you may not have a permanent office, but instead prefer the flexibility of a co-working space. This cost can also be claimed as an expense, including the rental cost and any service charges. Excellent news for burgeoning startups.
So, you see, there are many small business expenses that you can and should be claiming for your creative business. The world of tax deductions is bigger than many people realise, so it’s an absolute must to keep track of all your expenses and consult with accounting professionals (like us) to ensure you’re making the most of your allowable deductions.
So what is the smartest way to claim business expenses correctly and efficiently?
Leave it to the professionals.
At Raedan, we are the accounting experts for creative agencies. Without sounding too cliché, what we don’t know about accounting isn’t worth knowing about. So if you don’t want to get caught out with HMRC, then take our advice and hire someone who can take care of it for you and make sure you are claiming everything you are entitled to.
If you are looking for an accounting agency that can get your business expenses in order and save you some money, then get in touch.
