In the wake of the credit crunch and many years of erosion of the old job-for-life culture, more and more people are concluding that there are no longer any advantages to be had working their guts out for someone else. Instead, self-employment and setting-up your own business is becoming increasingly popular. As are freelance and contracting working styles, both for the freedom they bring and for the possibility of greater financial rewards.
However, despite working extremely hard to make every penny count and to get their businesses off the ground, many new small businesses, contractors, and freelancers neglect to take full advantage of the entitlements of their new work style and the tax deductibles that can help them take home even more money. Once you are self-employed you should immediately find yourself a top-notch accountant. They will assist you in finding the crucial tax deductibles for the self – employed and for your particular industry. Meanwhile, this article will consider some of the most common areas of tax deduction that contracting and freelance sector workers should consider.
Firstly, there are a great many deductions to be had if you work from home. If you are working either in your house or in a home/office premises then there will be various things you can claim on. First, begin by working out what percentage of your home could be categorized as a home office, dedicated purely to your business. This percentage can then be deducted either from your rental payments or your mortgage payments. Next, make sure you don’t throw away any business expense records related to the home office premises. These include building costs and maintenance costs as well as any business equipment such as printers and computers, phones, and stationery. Similarly, the business share of utility bills such as broadband, phone, and electricity is also tax-deductible.
Secondly, make a note of all travel expenses, no matter how small. They are all tax-deductible if the journey has anything to do with the day to day running of your business. Journeys can normally be split into those made for business only and those made for both business and pleasure. Your available tax deductions will depend on the manner of each journey. Many self-employed workers and small business owners keep a log-book with the car to record all business journeys.
Thirdly, any professional training courses that are useful for your business and for building your skills and making you more attractive to clients are also tax-deductible. Particularly if they lead to some kind of professional accreditation.
Fourthly, remember that if you need to hire anyone yourself to help with the running of your business, or to help out at home while you concentrate on your business, you will be able to claim for the cost of hiring these people. So, if you are working freelance and need to hire a nanny or a babysitter, or need to put children in daycare, then this will be deductible. Similarly, if you hire legal professionals or financial professionals, or even someone who designs the logo for your company, all of these costs can be deducted.
Lastly, remember to keep up to date with the latest information on tax relief and tax credits on offer from the government. Talk with an accountant about all the tax credits available to you and your business.