Common Business Expense Mistakes

Something we come across regularly with new clients are questions about what expenses you can claim on the business. Not every expense can just be put through the business and be tax deductible. Below is a list of the more common mistakes we see regarding business expenses:

• Client Entertainment - Lunches, dinners, drinks, etc. for clients are not tax deductible. They can be a business expense, but not something you can claim back against your tax liability. This also applies to sustenance, you can’t just claim food you have during the day and this includes your morning coffee.

• Clothing - Unless it’s a company uniform or PPE, clothing cannot be claimed back. So if you buy a suit for example, this cannot be claimed back.

• Personal Expenses - You can’t claim back anything not directly related to the business. Holidays, gym memberships, and other personal items cannot be claimed. If something has a dual purpose, such as a mobile phone, then only a portion can be claimed back, and even then you need clear proof.

• Commuting - You can’t claim travel from home to your regular place of work. The morning commute costs are not tax deductible.

• Fines - Speeding tickets and parking fines cannot be deducted, even if they are incurred as you are working.

• Business Loans - You can’t deduct repayments of business loans, although you can reclaim interest.

It’s not all doom and gloom though, in out next post we’ll go through expenses that you CAN claim back.