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Expenses That Are Tax Deductible for

Sole Traders/Companies
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Are you a small business owner that needs to file a tax return? Do you know what costs are tax-deductible so you can lower your tax burden at the end of the year?

What is the procedure for claiming a business expense?

Form 11 is used by sole traders to claim expenditures. The deadline for this return is October 31st. There is an extension until mid-November if you pay and file your return via Revenue’s Online System (ROS).

A Form CT1 is used by businesses to claim expenditures. The due date for this return is determined by your company’s accounting period. It is due on the 23rd day of the 9th month following the conclusion of the fiscal year. If you’re unsure when to file your Corporation Tax return, contact us  to avail best accounting and taxation services.

Expenses that are tax deductible include:

  • Fees for accounting services
  • Advertisement costs
  • Costs of insurance
  • Company formation costs, for example, are an example of legal and professional costs.
  • Expenses incurred prior to trading
  • Wages, including the salary of the director
  • Rent, car, and phone
  • Uniform and protective clothing

What are the costs associated with pre-trading?

Business owners can claim a tax deduction for expenses incurred in the three years leading up to the start of the company. However, you must be able to demonstrate that these expenses were purchased for the purpose of the business.

Pre-trading or set-up costs can include:
Fees for accounting services
Studies of feasibility
Plans for a business
The rent for the location where the trade or profession operates is paid.

How to figure out motor expenses?

Automobiles are frequently used for both business and personal purposes, whether purchased through the company or not. When filing your tax return, the amount used for business must be reported correctly and accurately to Revenue.

Here are some examples of when you’ll need to figure out your motor expenses:

For business travel, a personal vehicle is used.

Employees and directors who use their personal vehicle for business travel can claim a reimbursement based on the number of business kilometers travelled. Revenue establishes these rates, which are known as Civil Service Rates.

For personal travel, a company car is used.

If you have a company car and the company pays for all of the vehicle’s expenses, you may be liable for Benefit In Kind (BIK) if you use it for personal reasons.

BIK is a tax on the personal benefit or use of something provided by the company for personal use. Also referred to as fictitious pay, fringe benefits, or perks. PAYE, PRSI, and USC are all included in BIK taxes, and the rate is determined by the car’s original market value.

Is it possible to deduct rent as a business expense?

If you rent an office space or a building, your rent is a tax-deductible expense.

Rent is typically not a business expense because it is required for personal use. In other words, even if your business didn’t exist, you’d still have to pay rent at home.

However, if you move home to make room for a home office, you may be able to justify an increase in rent as a business expense. If you require assistance in this area, contact your accountant.

Working from house expenses

Tax relief is available for expenses such as light and heat, phone, and internet incurred while working from home. The payment can be made directly into your bank account by your employer, or you can claim tax relief at the end of the year, which is different from receiving a tax deduction.

Although sole traders are not eligible to claim this expense, it is useful to know in case you decide to change your business from a sole proprietorship to a limited company in the future. If you are an employer (including a Sole Trader), on the other hand, you may choose to make this payment to your employees.

Getting a refund on a phone bill

If you have a phone in your home office or a company mobile phone that you occasionally use for personal reasons, you may be able to deduct the entire cost.

If you buy a phone with an unlimited usage plan, you won’t have to pay anything extra for personal use

If you use your personal phone for business purposes, you may be able to deduct a portion of your phone bill as a business expense. However, this must be a reasonable amount, and proper records showing the business use should be kept.

If you require additional information, please contact us.

There are many different types of business expenses, and if there is any personal use, there are rules in place.

Companies claim expenses on a Form CT1, while sole traders claim expenses on a Form 11.

If you need assistance before your tax deadline. Discuss your requirements with our professional accounting team. We can suggest the most appropriate services for your company and industry.

WHAT’S THE NEXT STEP FOR ME TO DO?

If you have any queries, or would like specific advice, then please do not hesitate to contact us

call us on +353 (0)1 442 8230, 00353 851477625 or email moh@tasconsulting.ie