WHAT ABOUT EXPENSES?
Record keeping is important when it comes to running your business and not just to meet the standard legal requirements of holding onto your tax records for five years after you have submitted them to the Australian Tax Office (ATO). Without some kind of system in place it will be difficult when it comes to organizing your allowable deductions and expenses. It is mandatory that, as a business owner, you keep all records of any expenses incurred including invoices, cheque butts, receipts, credit card vouchers, diary entries and petty cash expenditure reports.
While the ATO does not keep a complete list of what you can claim as a business expense, they do have two basic guidelines. Firstly, you must have actually paid or at least are committed to spending money on the expense and secondly, the expense must be shown to be related to your business. You cannot claim any private or domestic expenses including food or regular clothing or similarly, expenses incurred prior to commencing the operation of your business.
Common claims include, although are not limited to, advertising, bank fees and charges, business travel, electricity, wages, vehicle expenses, repairs, phone expenses, rent or lease costs (including home premises), home office expenses, freight/transport fees and super contributions. If you are unsure about what you can claim as a business expense, contact either the ATO or your tax advisor.
Claiming deductions for depreciation is also a legitimate part of business reporting. A depreciating asset (an asset that has a limited effective life) includes your computer, any business tools, furnishings, carpet, curtains and motor vehicles.
For further information visit www.ato.gov.au or download their guide entitled Tax Basics For Small Businesses (http://www.ato.gov.au/content/downloads/BUS25193n1908_07_10.pdf), which is particularly helpful when determining your expenses.