Understanding Business Expenses
Plan your expenses and deductions strategically each year
Egestas tincidunt ipsum in leo suspendisse turpis ultrices blandit augue eu amet vitae morbi egestas sed sem cras accumsan ipsum suscipit duis molestie elit libero malesuada lorem ut netus sagittis lacus pellentesque viverra velit cursus sapien sed iaculis cras at egestas duis maecenas nibh suscipit duis litum molestie elit libero malesuada lorem curabitur diam eros.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Maintain accurate and organized financial records for easy reporting
Tincidunt pharetra at nec morbi senectus ut in lorem senectus nunc felis ipsum vulputate enim gravida ipsum amet lacus habitasse eget tristique nam molestie et in risus sed fermentum neque elit eu diam donec vitae ultricies nec urna cras congue et arcu nunc aliquam at.
Talk to a tax professional for expert guidance
At mattis sit fusce mattis amet sagittis egestas ipsum nunc scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa mi ornare et elit. In dapibus.
- Morbi fringilla molestie magna sed dictum. Praesent pharetra turpis augue.
- Cras mi purus, viverra vitae felis sit amet, tincidunt fringilla lorem.
- non mattis urna ex nec sem. Donec varius diam et suscipit venenati proin tincidunt
- Quisque euismod posuere lacus sit amet volutpat. Praesent vel imperdiet
Personalized Marketing: AI helps in analyzing customer data to create personalized marketing campaigns
At mattis sit fusce mattis amet sagittis egestas ipsum nunc. Scelerisque id pulvinar sit viverra euismod. Metus ac elementum libero arcu pellentesque magna lacus duis viverra. Pharetra phasellus eget orci vitae ullamcorper viverra sed accumsan. Elit adipiscing dignissim nullam facilisis aenean tincidunt elit. Non rhoncus ut felis vitae massa. Elementum elit ipsum tellus hac mi ornare et elit. In dapibus.
“Amet pretium consectetur dui aliquam. Nisi quam facilisi consequat felis sit elit dapibus ipsum nullam est libero pulvinar purus et risus facilisis”
Use accounting and tax software to make management easier
Placerat dui faucibus non accumsan interdum auctor semper consequat vitae egestas malesuada quam aliquam est ultrices enim tristique facilisis est pellentesque lectus ac arcu bibendum urna nisl pharetra bibendum felis senectus dolor commodo quam elementum sapien suscipit qat non elit sagittis aliquam a cursus praesent diam lectus tellus mi lobortis in amet ac imperdiet feugiat tristique nulla eros mauris id aenean a sagittis et pellentesque integer ultricies sit non habitant in cras posuere dolor fames.
Business expenses refer to costs incurred in the ordinary course of doing business. Every business will incur costs, which will be offset against income to determine profits and taxes due. Expenses need to be tracked throughout the year usually using various software packages.
What Are Capital and Revenue Expenses?
We can define our expenses into two distinct categories: capital expenses and revenue expenses. Capital expenditure are funds used to acquire and upgrade fixed assets, such as land, plant and machinery, fittings and fixtures or motor vehicles. While revenue expenditure are funds required to manage the day-to-day operations and management of a company, such as wages, light and heat, advertising, telephone. Capital expenditure typically consists of one-time large purchases that will be used for revenue generation over a period longer than a year.
Because of this, companies do not deduct the full cost in the year the expense is incurred. Instead, a portion is expensed each year by depreciating the asset over its useful life. Revenue expenses are short term expenses used in the period in which they are incurred and are dealt with in this manner. They are usually recurring expenses in contrast to the one-off nature of most capital expenditure. These expenses are deducted from income in the year they are incurred.
How Do We Define Deductibility In Relation To Expenses? The general test of deductibility when considering business expenses is whether the expense has been spent wholly, exclusively and necessarily in the operation of the business. The wholly provision rules out circumstances where an expense is incurred that serves a dual purpose. The full amount of the expense must relate to the operating of the business, in order to be claimed.
Exclusive means the expense just related to the business. This rule is only satisfied if the businesses sole purpose for incurring the expense is for the purposes of their trade, profession or vocation.
When we say business expenses are “allowable” this means that the tax rules allow the particular expense to be deducted from trading income when calculating the business profits, on which tax is paid. If an expense is not “wholly and exclusively” used for business purposes, then it is not allowed as a business expense.
Mileage, Subsistence and Other Expenses. An expense can be claimed for mileage and subsistence incurred in the ordinary course of business. First you need to identify where your normal place of work is. Mileage can be claimed from your normal place of work to your temporary place of work. The rates used to calculate this expense are the Civil Service rates from www.revenue.ie
Mileage must be tracked using claim forms and should be done cumulatively each calendar year as rates reduce after a certain amount of kilometres are reached. Subsistence rates can also be found on this website. Business entertainment expenses are not allowed as a deduction for the purposes of income tax or corporation tax. Entertainment expenses include expenses incurred on the provision of accommodation, food, drink or any form of hospitality.
Capital allowances are not granted in respect of assets used for entertainment for income or corporation tax purposes. The provision of a gift is treated in the same way in relation to business entertainment expenses.
The non-deductibility of expenses also applies to all payments and expense allowances given to employees and directors for the purposes of business entertainment. However, expenditure on staff entertainment is allowable as a deduction, provided its provision is not incidental to the provision of entertainment to third parties. These expenses must be reasonable and available to all employees.
Every business expense claimed must have a vouched receipt as backup for the claim. These receipts must be kept for six years after the end of the tax year to which they relate.
When books and records are given to DBASS for accounts preparation, expenses are analysed to ensure they meet the wholly and exclusively test. Any expenses that are not deductible for tax purposes are flagged by our staff.
This process is shared in full with the client before any tax returns are completed.
As always, should you require any further information on this or any other subject in relation to your business please do not hesitate to contact us directly on ph. 01 849 8800.
