What business expenses can I claim?

Here's a quick run down on every day expenses you can and can't claim in your business. As always, I welcome clients asking if they aren't sure.

So "ole mate down the pub" claims XYZ expenses, said I should be too. That's the most common conversation thread I get when clients are fact checking what they should and shouldn't be claiming.

Truth is, ole mate is probably PAYING for it from their business account, but at some point their accountant is recoding to drawings. Either when they do their GST, or when they do their end of year books. So no, they didn't claim their spa pool as a home office expense.

So the simple questions are:

• Was it incurred while running your business

• Was it directly related to earning income

• And it's not private in nature

If something is partly business and partly personal, you can usually claim the business portion only.

Things to look for:

• Cost of keeping your business running - rent, office expenses, software, internet, cellphone

• Vehicles and travel - a few rules around this which are too much for this blog. But business travel there are deductions even if you tack on a few days holiday at the end. Vehicle expenses to the extent that they are needed for work. If you work from home and don't visit clients its hard to justify filling up the car with petrol. Each case is different and best to check with us. Travel is something we always look at at year end

• Equipment and assets - your tools, laptop, whatever assets you need to earn the money. Vehicles yes but there are private use considerations

• Marketing costs, including websites, social media

• Staff costs and training

• Meals and entertainment - there are a matrix of rules around this. But the one thing you need to do is record who it was with and why

• Work from home costs

• interest on loans taken out to fund the business (usually this is to buy business assets or to buy the business itself), not the principal

Things you can't claim for

• Work clothes unless it is safety equipment or branded. IRD don't care you have to pay for corporate wear to earn your living, so do those who go to work for wages, and a deduction isn't available to them

• Fine and penalties, including speeding tickets

• your lunch

Red flags

• 100% vehicle claims with no records, unless you are a company paying FBT

• Large entertainment or vehicle claims relative to income

• Mixing personal and business spending - keep your personal spends out of your business account

• Endless GST refunds - usually comes with a Please Explain from IRD

• Complicated business structures that look like smoke and mirrors

• Not keeping receipts and records

  
  

Remember it's not about being conservative, it's about being accurate and able to defend your claims if IRD ask. This isn't the entire list, so if in doubt, run it past us.