If you own a business, it’s a good idea to claim tax relief whenever possible. This can mean extra cash in your pocket at the end of the tax year or even reducing the amount of tax you have to pay.
So, what kinds of business tax deductions are there? You’ll take a look at some common ones and explain how they work:
You can claim tax relief on statistical sampling.
If you have to undertake statistical sampling as part of your business operations, you can claim tax relief on the cost of doing so.
To calculate the amount of tax relief you are entitled to, multiply the average rateable value by 1/5 and add it to your current year’s running costs.
You can claim tax relief on things you buy to use in your business.
It’s possible to claim tax relief on things you buy to use in your business. You may need to buy a new computer, a van for deliveries, or even a car. You can also claim tax relief if you pay for repairs and maintenance on these items.
You can also claim tax relief when buying land or buildings for use as part of your business.
You can claim tax relief on business travel expenses.
You can claim tax relief on business travel expenses. Business travel includes domestic and international trips, but only if they are taken for your business. You also need to prove that the trip was necessary and wasn’t just a leisure activity. “An expense is “ordinary” if it’s common and accepted in your trade or business. An expense is “necessary” if it’s helpful and appropriate to your business,” says Lantern by SoFi experts.
If you are filing as self-employed or a limited company, then any business travel costs will be deductible from your profits precisely as other expenses are deducted. If you work for an employer who pays your salary and provides some benefits, their contribution towards these costs is not taxable in the same way – so you won’t get to claim them back on your tax return.
You can claim tax relief if you spend money training or retraining your staff.
You can claim tax relief on training courses. You can also claim tax relief if you spend money on training your staff to keep their skills up to date. And if the training is needed because there’s been a change in legislation or regulations, then this could be a legitimate reason for claiming tax relief too.
You can claim tax relief for paying certain membership fees.
Suppose you are a member of a professional body, such as the Chartered Institute of Management Accountants (CIMA), and you pay a subscription or similar fee to that body. In that case, you can claim tax relief on it.
The same applies if you are a member of a trade association or Chambers of Commerce and pay membership fees. The same also applies if you are an associate member of business clubs such as the Institute of Directors (IoD).
The tax reliefs in this article are just a few of the many that are available. So if you’re interested in finding out more about them, or if you have any questions about your business situation, get in touch with a qualified accountant who can help guide you through this process.
Apart from these general criteria for eligibility, some other factors may also determine eligibility to avail certain types of business tax reliefs offered by the government such as type and size of industry, contribution to GDP etc. Therefore, it is important to check with local authorities before applying for business tax reliefs based on current rules and regulations related to them at respective state level or federally level.
Common Mistakes to Avoid When Claiming Business Tax Reliefs
Claiming business tax reliefs is the only way to protect the profits of your business and there are several ways you can get business tax reliefs. However, mistakes in claiming these reliefs can lead to serious complications with the government and its agencies. To ensure that you make the most from available government-funded tax reliefs, you should avoid the following common mistakes when claiming business tax reliefs:
- Not Keeping Proper Records: Proper documentation is essential for accurate filing of taxes and claiming available deductions. Therefore, make sure you have sufficient documentation for all deductible expenses in order to accurately report them for tax purposes.
- Missing Submission Deadlines: Each deduction has different deadlines when it comes to submitting claims. Therefore, it is important that all claims are submitted within those specific stipulated deadlines to maximize cost savings from your deductions.
- Not Knowing Eligible Tax Relief Benefits: Many times businesses do not understand which expenses qualify as deductible expenses and miss out on potential savings due to lack of knowledge in this area. Make sure to look into available guidelines so you know exactly what items qualify as eligible costs for tax deductions.
- Claiming Ineligible Expenditure: It is also important to understand which costs are not eligible for any kind of deductibles or exemptions and not claim them on your return just to enhance your expense profiles unfairly or illegally. Such mistakes could draw unwanted audit attention from authorities or face penalty charges even if a legitimate error is made inadvertently or unknowingly during filing periods.
By not committing these common mistakes when claiming business tax reliefs, businesses can be assured of receiving maximum benefit from available funds without unwanted audits or penalty charges that may hinder their progress significantly going forward in their investments and ventures.
In conclusion, it is important for small business owners to understand their options and seek out the best business tax reliefs available. There are multiple options available to help reduce your taxable income, including:
- Tax credits
- IRS payment plans
Additionally, filing your returns timely and properly, making estimated payments throughout the year, and keeping accurate records are important steps in positioning yourself for the full range of available business tax relief opportunities. By taking proactive steps to reduce your taxes beyond what is required by law you can significantly boost your bottom line.