Throughout the business year, small businesses spend money on items both big and small. Whilst some of these expenses might be chalked down as extravagances, the majority of them will be 100% tax deductible. Even purchases below £10 are eligible for these deductions, but many small businesses are simply not bothering to claim them.
At the time, it might not seem like the money you recoup from such tiny expenses is worth the effort. But, in the long run, tax accountants for small businesses estimate that the average micro-business owner is missing out on around £216. In an industry defined by slender profit margins, this could make a significant difference to your finances. When it comes to expenses, small businesses need to start sweating the small stuff.
Whilst the tax relief for each sub-£10 item may indeed be negligible, over the course of the tax year, they can soon add up. Let’s face it, under any other circumstances, losing out on £200 would be a huge blow. So why are small businesses so content to give it up in this scenario?
On the whole, it seems most small business owners believe that the extra time spent logging sub-£10 expenses isn’t worth the minimal amount they can reclaim. Looking at it on an individual basis, this may well be true. But when lazy bookkeeping is resulting in a loss of more than just a few quid, something needs to change.
It’s unfair to assume that small businesses are deliberating evading the paperwork that coincides with tax relief. Instead, it’s likely that small business owners simply don’t have the time to record every single expense they make. Another possible scenario is that owners aren’t fully aware of what they can claim on.
As a general rule of thumb, small businesses can claim on any purchase that relates directly to the operation of their company. This includes items such as:
Whilst most of what these categories cover are obvious, some claimable items aren’t so conspicuous. For example, did you know that you can claim tax relief on the distance you’ve travelled into work by bike? At 20p a mile, you could be losing out on a small windfall if you commute on the saddle every day.
Working from home also comes with hidden reliefs. In most circumstances, you should be able to claim on the utilities you use whilst in your home office. Lighting and heating fall under this category. What’s more, for claims under £4 a week, you don’t need to produce a record of your expenses.
For those expenses, you do need to make a note of, a small business bookkeeping service allows you the freedom to carry on with the running of your business without the added fuss of writing everything down. A trained small business accountant can do the donkey work for you, reducing the chances of any expenses slipping through the net. Not only this, but they can ensure all your accounts are in order, so you get the best possible return at the end of the tax year.