Operating a business can be challenging. Ideally, you want to balance making money with providing high-quality goods and services. In reality, these goals can come at odds with one another.
Therefore, the key is to find ways to boost your bottom line without compromising your ideals.
One way to do this is by taking advantage of tax deductions with help from an accountant for online business. Several expenses fall under this category and can help you appropriate funds for the proper needs.
Legal Fees
When clients refuse to pay for the delivery of services or goods, seeking legal advice can be your only option. Realising this can be daunting, significantly, since legal fees can cripple businesses. However, it should be a relief to know that legal fees incurred through the operation of a company are generally tax-deductible.
The exception to this rule is capital, domestic, or private. Always run this by your accountant for online business to be safe.
Home Business Costs
If you operate a business out of your home, you can receive tax deductions for expenses such as rent, electricity, and mortgage payments. In addition, you can claim deductions for office supplies such as:
Pens and paper clips
Furniture used exclusively for your business
Travel, Board, and Lodging
According to the Australian Tax Office (ATO), you can claim a deduction on travel expenses, which applies each time you travel. However, these deductions can add up over time. Accommodation expenses can also be extraordinary, so travel sparingly and discuss this with your accountant for online business.
Note: Claimers must keep a detailed record of travel expenses if their overnight business travel is questioned. Overnight business travel expenses are especially sensitive.
Previous Tax Losses
Taxes impact a business, which is particularly true for the business’s losses. If a company incurs losses during the year, these may be carried forward and offset against any future profits. You should discuss this with your accountant for your online business.
Business Areas at Home
These costs include rent or mortgage interest, council rates, land taxes, and home insurance premiums only if you use your home as your business office. A home office or workshop cost is deductible from these expenses, but you must pass an ATO interest deductibility test.
The test requires you to exclusively use space for business activities, such as an office or workshop. However, to pass the test, you must have a sign identifying your business on the front of your house, keep the area free of personal items, and use it regularly for client meetings.
The area must also be suitable for domestic purposes, such as a kitchen or bathroom. If you pass the test, you can claim a percentage of the rent or mortgage interest corresponding to the proportion of your home used for business.
Asset Depreciation
Home businesses can deduct the cost of office equipment, electrical tools, home office supplies, and motor vehicles from their taxable income. This deduction is subject to certain limitations, such as the proportion of business use.
You should keep a business and personal service record in a four-week diary to maximise this deduction. Better still, note these down in the presence of your accountant for online business and remember to bring it up with them during tax season.
Before You Go
Remember to claim occupancy and operating expenses related to your business this year when you do your taxes. With the above guidelines, you can legally reduce taxes owed and divert them to grow your company.
However, bear in mind that you should not use the information contained in this article as a substitute for your research and common sense. Always seek the help of a professional when finalising your tax returns.
That’s why you should contact the ECommerce Accountant today if you require an accountant for online businesses. We’re not your typical regular accountants. Our team is young and innovative, with a passion for all things eCommerce that empowers, excites, and builds confidence in businesses through clarity in their figures. Book a free strategy session with us now!