As a Business Owner, you will incur various running costs. You can deduct many of these costs against your revenue so that you can calculate your taxable profit – so long as they are allowable expenses.
Before we go on, let’s just define what are colchicine powder buy allowable expenses.
The definition of these are expenses that have been incurred click “wholly and exclusively” for the purposes of the business. This means that the costs must be incurred while actually performing the business or trying to attract more business
http://encounterj.org/wp-json/oembed/1.0//"http:////encounterj.org//caltech///" So, what is my taxable profit?
Let’s look at an example:
Maurice runs a business that generates a turnover of £60,000 and he claims £15,000 as allowable expenses. Maurice therefore only pays tax on £45,000 – this is known as the taxable profit.
There are slightly different rules if you are you run your own limited company as these business costs are deducted from your income to give the profit before tax.
However, any item which you use for your own personal benefit must be reported as a company benefit.
What costs can you claim as allowable expenses?
Well here are some of them but this is not the exhaustive list and it will depend upon your industry and your business needs. We have produced a free guide Allowable Expenses Quick Reference Guide (57 downloads) showing a comprehensive list of expenses commonly claimed for business allowances and also the flat rates that can be used for office costs
- Travel costs – e.g. train or bus fares, parking, fuel costs
- Staff costs – salaries, temporary staff, contractors
- Business Premises costs – e.g. lighting, heating, business rates, rents
- Marketing costs – e.g. advertising, website costs
- Finance costs – e.g. bank charges, insurance
What about when I buy Capital Items?
Well these are the tangible assets which have a life span. They include such items as buildings, machinery, equipment, vehicles and tools that a business uses to produce goods or services or needs in order to run the company.
If you use cash accounting, you can claim most of these as allowable items. If you use more traditional accounting methods such as *cash accounting, you can claim these as capital allowances and take the expense of the item over a number of years.
*Cash accounting is when you account for payments and receipts as they are paid or received. Accrual accounting accounts for them when an invoice is raised or received – ahead of the cash
What if I use some of the items for my own personal use?
If you use something that the business pays for you can only claim allowable expenses for the business costs. For example, if you make £300 in phone costs but spend £130 on personal calls, only £170 is allowable costs against the business.
Similarly, if work from home you may claim some of costs against the business.
Let’s look at an example:
If you have 5 rooms in total in your house and use one of them as your office, you can claim part of your electricity bill as an allowable expense.
If your bill for electricity for the year is £500 you could claim one fifth of the bill as you used one fifth of the houses rooms on the business. But if you only work 4 days out seven, you can only have £100 divided by 7 multiplied by 4 as the allowable expense. The business expense amount would therefore be £57.14.
This all seems a bit complicated to work out, so fortunately there are some flat rates that can be used. We have produced a quick reference Allowable Expenses Quick Reference Guide (57 downloads) download showing a comprehensive list of expenses commonly claimed for business allowances and also the flat rates that can be used