business costs

foxydan

Hi All,

I've started my business at the beginning of this month (consultancy) and have registered for self assessment which I have an accountant doing for me.

I am required to complete my own books which I shouldn't find a problem but wanted to know a few things regarding business costs. Thought I'd ask on here before I ask the accountant.

I am about to set up my books on a spreadsheet and have logged my business mileage so far but how do go about recording this on the actual spreadsheet?

I also want to know what else I can claim. Here is a list so far:

Website running costs
Stationery items (ink etc)
my accountant fee

Any advice would appreciated. Thanks

runninglea

open up a separate bank account (not necessarily a business one) to use. Put all your income in and use it to pay any suppliers you may use.

It starts getting confusing if you charge someone £400 and they pay you in cash, then you pay suppliers £250 cash and then only put £150 into the bank.

Keep an excel speadsheet of all your income and expenditure and keep all your receipts.

Keep a log book (just an excercise book) of all your mileage to claim back. At present 45p per mile and then write a cheque to yourself once a month for mileage.

PlutoinCapricorn

Many consultants do not need or use a separate/business bank account: I certainly don't. A few cheques or transfers here and there from clients slip under the radar - paying in lots of cash and having a lot of small payments are another matter. As a sole trader, you are the business.

It is different if you are "trading as" something other than your own name.

What have you bought that you would not have done if you had no business? What are you using more of because of business work? Do you spend a lot of time at home? You can claim a reasonable proportion of the running costs.

foxydan

Currently I am working three days a week in my usual job and working for myself the other two days. I don't really use muchhousehold energy in relation to my business so wasn't going to bother with that.

I have set up a separate account as I don't want to mix up my business and personal finances.

Fuel - so it is 45p for every mile and that means all I have to do is take a note of the mileage as I am doing and then at the end of each month transfer the money from my 'business account' to my personal.

So should I keep receipts of petrol even though this will include the personal side of fuel costs as well?

MacMickster

PlutoinCapricorn wrote: »

Many consultants do not need or use a separate/business bank account: I certainly don't. A few cheques or transfers here and there from clients slip under the radar - paying in lots of cash and having a lot of small payments are another matter. As a sole trader, you are the business.

I have to disagree with this. I think it is vital to differentiate between you and your business and to have seperate bank accounts for each. It gives you a better idea of the health of the business and an earlier indicator of cash flow problems. You have to decide what money you can afford to take out of your business and again this is far easier to do when you can look at the business account seperately.

With a seperate bank account it will hopefully be easier for you to seperate and identify your business expenditure from private.

Horace

foxydan wrote: »

Currently I am working three days a week in my usual job and working for myself the other two days. I don't really use muchhousehold energy in relation to my business so wasn't going to bother with that.

I have set up a separate account as I don't want to mix up my business and personal finances.

Fuel - so it is 45p for every mile and that means all I have to do is take a note of the mileage as I am doing and then at the end of each month transfer the money from my 'business account' to my personal.

So should I keep receipts of petrol even though this will include the personal side of fuel costs as well?

I must admit that I don't keep my petrol receipts because I claim mileage - if you claim petrol then you are claiming for your car, depreciation of said car, repair costs etc. You can't do both. I keep a little book in my car and set the trip meter to zero at home and then note mileage for round trip to business meeting.

The HMRC offer free courses about self assessments (always handy to go on even if you have an accountant) and they advise what can and can't be claimed.

foxydan

Horace wrote: »

I must admit that I don't keep my petrol receipts because I claim mileage - if you claim petrol then you are claiming for your car, depreciation of said car, repair costs etc. You can't do both. I keep a little book in my car and set the trip meter to zero at home and then note mileage for round trip to business meeting.

The HMRC offer free courses about self assessments (always handy to go on even if you have an accountant) and they advise what can and can't be claimed.[/QUOTE

I agree with the accounts as this is why i decided to set up a separate account. I will be claiming mileage costs also and not petrol, I just didn't know whether i had to keep receipts.

chrismac1

Officially you must keep fuel receipts even if claiming 45 pence a mile. This one is one of the rare occasions when HMRC defended UK taxpayers, but were ruled against by the European Courts. I've never seen this enforced strictly but ther's always some jobsworth somewhere....

foxydan

one other thing that I have thought of is pension contributions. As I know work only three days a week in my usual job my pensions contributions have been reduced. I want to obviously top these up so that they are what they were before.

Can I do this?

How would this be recorded?

Thanks

ben.bayliss

Think you're overcomplicating things a bit tbh.

Pensions - your contributions are grossed up by your personal pension provider. Tell your accountant how much you've contributed in the year and it'll go down on your form. If you're a 40% taxpayer then you'll get a further 20% relief on the contribution.

Mileage - Just keep a record of where you've been. Total miles x 45p = your deduction.

Accountants fees - You are responsible for completing your tax return. If you choose to employ an accountant to help you then that's an individual decision and as such you're not able to deduct these on your tax return.

Generally - the expression to bear in mind is 'wholly, exclusively and necessarily'. Anything that you spend which is used entirely in a business context, is necessary to do your job is probably deductible against your income. So yes, website costs would be ok, as would stationary used only for business uses (ie. not if you give some to your kids to draw on etc.)

BoGoF

ben.bayliss wrote: »

Pensions - you simply tell your accountant how much you've paid in contributions each year. That amount gets deducted from your total income before working out how much tax you need to pay

Pleased ignore that 'advice' - it is so wrong unless you have an old retirement annuity policy.