The ultimate guide to tax deductions for small business owners

Tax deductions can cause confusion for business owners. That’s what makes it so crucial to work with a good small business accountant in Melbourne to comply with accounting quality standards that help foster business success.

Interested in learning about tax deductions to make the most of your 2022-23 tax return? Look no further than this complete guide to small business tax deductions.

Save you the trouble of worrying about business expenses with a little insight into what you can and can’t claim.

On the bright side, there are ways for small business owners to get a tax break. It’s unnerving to own a small business and as we’re sure you know, it requires a lot of determination. It can also be an exciting time as the independence and freedom of work becomes highly attractive.

No matter how simple or small you think your business tax is, a small business accountant can help you across the following areas:

• General small business accounting
• Business tax returns in Melbourne
• BAS and IAS
• Monthly compliance
• Tax minimisation

If accounting and bookkeeping sounds too far out of your depth, seek assistance from a small business accountant in Melbourne. They can not only help you with your tax refunds but also ensure you meet all your tax obligations by verifying that your small business is registered for all the necessary taxes.

The earlier you hand over the reins to a qualified accountant, the quicker you will see financial affairs being better managed, budgets becoming clearer, and accounts being straightened out.

Small business tax accountants provide cost-effective solutions to sorting out your financial affairs and more.

There is almost immediate clarity in your business accounts with the combination of cloud-based computing software and an expert team of accountants. The support of a small business accountant will help you regain control of your finances, while simultaneously saving time, confusion, and frustration.

If you want to know what else our accountants in Melbourne can do for your small business, you can check out our post on how can an accountant add financial value to your small business.

Can a small business get a tax refund?

The short answer is yes, but only certain things, across a range of business needs, purposes, and activities.

Some of the most popular costs we’re asked about are travel and meals.

If the trip is mainly for business purposes, then you may be able to claim many travel expenses, including:

• 50% of meal expenses (either by employing the per diem rate or by monitoring actual costs)
• Accommodation, be it a private rental or hotel
• Bus, airfare or train tickets to get where you’re travelling
• Dry cleaning and laundry – while on the go
• Transportation (taxis, public transport, rideshare)
• Car hire fees, car parking, road tolls

In regards to meals, as long as it’s for a true business purpose, you may be able to claim 50% of the cost of food and drink. These expenses can be monitored by recording the full cost of the meal and reporting 50% on your tax return.

Meal costs that can be deducted include:

• Food bought for your staff
• Coffee meetings, drink and lunch where you talk business with mentors, employees and clients

It is important to note, this does not encompass grabbing lunch for yourself during the day or purchasing a coffee.

Are utilities tax deductible for a business?

Utilities you pay for operating your business may be deducted from the following:

• Any phone costs used for business (If you use your phone professionally and personally and if you’re self-employed, deduct the percentage of the costs you used for work)
• The cost of Internet in the office and any costs sustained on the go (like paying for Internet at hotels and mobile hotspots)
• Water and electricity for your office space

Can you write off car insurance business expenses?

Yes – but you must identify and justify the percentage that you are claiming (particularly if the vehicle is used for both business and personal use). The best way to track car usage is by maintaining a 12-week logbook on car usage for business use justification.

A portion of maintenance, fuel, and depreciation can be monitored to record the individual expenses incurred.

When you drive somewhere for your business – such as to a client’s workplace for a meeting – record the kilometres you are travelling and store a physical or electronic log.

Note that driving to and from your place of work from home is regarded as personal, and as such is not something that you can claim.

What can you write off on taxes if you work from home?

If you have a room serving as an office or even a desk in the corner of your bedroom, a portion of your home costs can be deducted as part of business expenses. This space must be a dedicated workspace.

You may be able to claim portion of the following expenses:

• Electricity (associated with powering and charging devices, lighting, heating and cooling)
• Phone and internet usage
• Consumables and stationery (notebooks, printer, ink)
• Equipment such as your desk, chair, laptop stand or headset

The ‘shortcut method’ was created due to the drastic increase of those working from home during COVID. This method is still acceptable until the end of the financial year (30 June 2021).

The calculation is simple: 80 cents per work hour.

Can I write off business supplies on my taxes?

These are the things you feel that you are continuously using and replacing to maintain the smooth operation of business.

They can by written off as supplies and comprise:

• Dinnerware and disposal utensils for an event or restaurant
• Art supplies needed for hand-made goods
• Fonts, website themes, stock photos and other digital supplies

What advertising expenses are deductible?

Advertising – no matter how large or small the budget – is a critical part of running a business.

Expenses under advertising include:

• Costs of developing and maintaining a website
• Designing and printing brochures and business cards
• Email marketing costs
• Sponsored / paid content
• Billboards
• Radio and television advertising
• Social media, digital and print publications
• Marketing or advertising consultancy

Advertising expenses can add up quickly so be sure to monitor and track everything.

Need help determining where you can claim tax?

Make the most of the upcoming tax season with Bruce Edmunds.

Our Melbourne accounting services help ensure you get the most from your tax break while remaining compliant and fulfilling all your personal and business obligations.

Our accountants are registered with the Tax Practitioners Board practicing professional competence and due care.

Find out how we can assist you today by calling (03) 9589 5488. Alternatively, fill in this enquiry form and we will be in touch with you.