It is popular among businessmen that when you are associated with the market being a sole trader, the business expenses are often inevitable. The good news is that sole trader expenses are allowable to deduct from the taxable payments. This will help to reduce your tax bills.
There is a way to be eligible for proving your business expenses to be allowable. A proper method must be followed to process the proportion of the amount used for business before you decide to make a claim about allowable expenses.
When you intend to buy products for selling or offer services to the customers, the cost involved is considered allowable expenses. Just like the cost involved in managing the salaries, wages, staff costs, agency fees, and other such business expenses. In this comprehensive guide, you will discover all the expenses that you can claim and they come under the list of allowable business expenses.
Utility, Insurance, Rates, and Mortgage
The allowable business expenses can cover a long list that included the cost involved in security, insurance, gas, electricity, water and business rates, mortgage interest, property rent, etc. In case you are running your business on your home premises, your proportion of utility bills that are used for the business purpose can be claimed as well.
Let’s take the example of a house that has six rooms and one of the rooms is being used for business purposes. The proportion of your utility bills will be one-sixth of the overall bill of your house. Moreover, for a sole trader, the expense involved in the repairing and maintenance of the business equipment is also an allowable expense. For instance the repairing of the room you use for business purposes at home.
Office Cost, Stationary, and Phones
Broadband, mobile and telephonic use from home to run your business also comes under the allowable business expenses. Often cash accounting is being followed in such businesses, the cost you spent on the tools and equipment is also an allowable business expense that you can claim later.
The paperwork requires the use of stationary, posting, printing, and ink cartridge. This comes under the list of allowable business expenses as well.
Credit Cards and Loans
Due to the involvement of the bank processes and helpful business offers, some of the costs are covered under allowable business expenses. Here we can take the example of interest on the loans and other financial payments that can help to carry out your business. Such offers are not enough suitable if we exclude the factor of allowable expenses and sole traders are unable to make a claim of such business expenses.
Professional Fees and Other Advertising Costs
No one can deny the main requirement of professionals and advertisements when it comes to growing your business. The cost involved in advertising your products and services in the paper come under the list of allowable business expenses as a sole trader.
Accommodation, Vehicle, and Clothing
There is always a need for a vehicle to fulfill the demands of your business needs. You might need to visit your clients or make the purchase of business tools and equipment. All these steps involve the use of a vehicle. If you aim to buy a vehicle for business purposes, the cost involved in buying a new vehicle can be claimed. The professionals suggest making a claim for such a business expense as a capital allowance.
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The Bottom Line
Now that you have gathered enough information about sole trader expenses, the discussion can finally come towards wrapping up. It is important to consider that along with the bright side of the business expenses that you can claim, there are a few expenses in which the cost involved can not be claimed.
This refers to being cautious while you start the process to make claim about your business expenses as a sole trader. We hope this guide has provided enough in the last allowable business expenses to get you started with the process. However, you can always seek professional help for seamless working.
Disclaimer: The information about sole trader expenses provided in this article is general in nature. It does not intend to disregard any professional advice.