If you are running a business from home, you might find yourself wondering about the financial implications.
The truth is that running this kind of business and being self-employed? It’s actually easier than most people think. If you are know the basics you should find that you can get more done than you might have thought.
One of the first things that self-employed business owners want to know about is the expenses are of a home-run business. Particularly, what you might be able to claim back on a tax return each year. And there are many such expenses you should bear in mind, so it helps to know what they are upfront. Let’s take a look at some of the most important now.
Rent
If you are renting, this is something that you can claim on your expenses as a self-employed home business owner. You might not be able to claim all of the rent, however. It’s important that you understand fully how much you can claim and how much you might need to leave be. If you pay rent solely by yourself, you might be able to claim the entire amount for the year. However this is not always the case. There is always an upper limit you can claim too. So you will want to check and make sure that you are getting it right.
If you only pay for some of the rent, you can only claim on your share. What most people do to be safe is simply claim for their share of the rent divided by the number of rooms in the property. That then essentially means you are claiming back on the rent for the one room you do your work in. Unless of course you do your work in more than one room. In that case you will need to change the mathematics accordingly. But the main thing to remember is that you can claim on your rent, and you should!
Mortgage
Actually, it’s not just for those renting either. If you are paying off your home with a mortgage, you can claim that back in the same way too. This is worth remembering, as it is not as well known as the rent expense. Yet it can be considerably more lucrative as something to claim back on expenses.
Whatever your mortgage is, or you share of it, divide it by the number of rooms and claim that amount back. You might also want to consider this if you are ever thinking about buying a house. It can come into your calculations and actually end up making a considerable difference to what decision you might make.
Energy
Of course, in order to be able to work anywhere at all, you need to make sure that you are providing energy to that space. That is why you are also liable for claiming energy back on your expenses too. Whatever energy bills you might be paying for at least in part in your home you will be able to claim a portion back for using it as you work on your business at home. This is true for either gas, electricity or both.
You work it out in exactly the same way as the two mentioned above. But make sure that you are holding on to your statements and receipts of payment if you are to keep it all above board. You need to be able to prove that you have actually paid the expenses in the first place, should the taxman ever come looking for you to see if you have been honest.
It is of course wise to ensure that you are always as honest as possible in all of these calculations. Also double-check your figures before entering them in to your tax return.
You will need to consider here too whether or not you want to try and keep the costs of your energy down in the first place, or merely claim them back later on. This can be a tricky mathematical puzzle to work out. But it is something you will want to think about in order to make the most of the situation.
You should also remember that you can claim on anything related to your energy use. Even if it isn’t explicitly the bill to the energy supplier you are claiming for. For instance, if you have an oil-heated boiler, you can claim the cost of the oil, as well as the cost of any oil tanks you might use to store that oil. If you use wood in a burner or a fireplace, you can claim for the cost of the wood. And so on.
Internet & Phone
Chances are, you use the internet to keep your business running, and your phone line as well. You should endeavor to include these in your tax return too. Without using those things you would not be able to keep your business running at all. Whereas with the above you will need to split up the costs, when it comes to the internet and phone use you can claim it in total. So you may as well ensure that you do exactly that and get your money’s worth. Given how vital the internet and your phone is likely to be for your business, you should absolutely ensure that you claim these as much as you legally can.
As you can see, there is plenty that you can claim. And you will probably be able to find more you can claim on too if you look around, including one-off purchases such as computers or other equipment. Claim what you can, stay within the law, and you should come out on top.
