Starting a home-based business in Australia can be an exciting and rewarding venture, but it’s important to keep track of your business expenses to ensure that you’re staying within the guidelines set out by the Australian Taxation Office (ATO). Here’s your guide to help you understand what expenses can be tax-deductible for your home-based small business.
- Home-Based Business Running expenses
If you use your home as your place of business, you may be able to claim a portion of your household running expenses as a tax deduction. These expenses can include electricity, gas, and water bills, as well as phone and internet expenses.
To work out the portion of these expenses you can claim, you’ll need to calculate the percentage of your home that you use as your place of business. You can then apply this percentage to your total running expenses to determine the amount you can claim.
- Home-Based Business Depreciation of assets
If you use any assets for your business, such as a computer or printer, you may be able to claim a deduction for the decline in value of these assets over time. This is known as depreciation.
To calculate depreciation, you’ll need to determine the cost of the asset, the estimated useful life of the asset, and the percentage of the asset’s value that has been used for business purposes. You can then use this information to work out the amount you can claim as a deduction.
- Home-Based Business Home office expenses
If you have a dedicated home office that you use exclusively for your business, you may be able to claim a deduction for expenses such as rent, mortgage interest, and property insurance.
To be eligible to claim home office expenses, you’ll need to meet certain criteria. For example, your home office must be a dedicated workspace that is used exclusively for business purposes, and you must keep detailed records of your expenses.
- Home-Based Business Motor vehicle expenses
If you use your car for business purposes, you may be able to claim a deduction for your motor vehicle expenses. This can include fuel, insurance, and maintenance costs.
To claim a deduction for motor vehicle expenses, you’ll need to keep a logbook to track your business usage. You can then use this logbook to determine the percentage of your motor vehicle expenses that are tax-deductible.
- Home-Based Business Other expenses
There is a range of other expenses that you may be able to claim as deductions for your home-based business. These can include things like stationery, advertising, and professional development expenses.
To be eligible to claim these expenses, you’ll need to be able to demonstrate that they were incurred in the course of running your business. You’ll also need to keep detailed records of your expenses, including receipts and invoices.
In conclusion, starting a home-based business in Australia can be a great way to pursue your entrepreneurial dreams while enjoying the flexibility and convenience of working from home. By understanding the types of expenses that are tax-deductible, you can ensure that you’re making the most of your business opportunities while staying within the guidelines set out by the ATO.
Talk to us today to discuss your situation and ensure your expenses are claimed as per the requirement and you are achieving the maximum benefits. Setup the time to talk to us obligations free: https://www.seedplus.com.au/bookkeeping-payroll-bas-businessaccounting-review-quote/
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