A home-based business provides freedom, reduced expenses, and a comfortable atmosphere in which to run your world. Yet when the time for tax season arrives, many of those owners miss opportunities to maximise deductions. With more Australians working from home than ever before, knowing what you can claim — and what you can’t — is crucial. When you are preparing your tax returns in Dandenong, it’s important that you work with professionals to avoid mistakes and get the most out of your entitlements.
Most business operators do not even realise that easy claims, such as, internet, office furniture, and part of the utility bill are deductible. Still others have difficulty distinguishing between personal spending and legitimate business expense that qualifies as a deductible. Understanding the rules not only saves you money, but also ensures you remain ATO compliant.
Avoiding Costly Tax Mistakes
You are running a home business, so you have personal and business expenses. Without care, it’s a cinch to avoid common mistakes when filing tax returns or even invite penalties. To help you avoid common tax-errors, here’s a checklist of what not to do when filing your returns.
- Set up with a separate business account and personal account
- Organise and keep receipts, invoices, bills for evidences
- Don’t over-claim — only list relevant business costs.
- Lodge or pay on time so you do not have to pay penalties or interest.
These simple steps can spare you headaches and money when it comes time to file.
What You’re Entitled to Deduct as a Home-Based Business
1. Occupancy Expenses
If you work from a dedicated home office, you can date back part of your rent or mortgage interest, council rates, or home insurance. The claim should state the percentage of floor space actually used for business.
2. Running Costs
- Ordinary expenditures to maintain your office can be deductible, such as:
- Electricity and gas for heating, cooling, and lighting
- Telephone and internet phone charges (business use only)
- Cleaning costs for your workspace
3. Office Equipment and Furniture
Desks, chairs, printers, and computers are deductible. Accept under the instant asset write-off threshold which can be claimed in full, but for more significant assets it will be written of over a number of years.
4. Motor Vehicle Expenses
If you drive your car for client meetings or deliveries, you can claim costs using a cents-per-kilometre method or the logbook method. But daily travel between your home and some other work location generally isn’t deductible, unless it’s from your home to your primary place of business.
5. Professional Services
Expenses hired ringers, consultants, or tax accountants in Dandenong are also deductible. These pros not only make sure that you’re compliant, but they can also find deductions you would not.
Unique Deductions for Home-Based Operators
If you work from home, you can also deduct dual-purpose assets. For instance, if 60% of your internet use is for business, you can take that percentage as a deduction. It is the actual records that are crucial to substantiating these claims.
Note: If you operate a business from part of the home, there may be capital gains tax (CGT) implications at time of sale. If you plan, you won’t be ambushed.
Insights from Tax Experts
That kind of support is priceless. Here are expert tax accountant tips for home-based business owners:
- Spot the underground deductions, like depreciation on your office furniture.
- Differentiate between cost of occupation and cost of running.
- Keep a budget for the quarterly savings ahead of any liabilities.
- Review your business structure for tax saving purposes.
Final Thoughts
Getting the most tax deductions requires some planning, record-keeping and sometimes hiring a tax preparer. Every credit count, from tenancies and outgoings to plant and services. With trusted tax accountants in Dandenong like Taxxed on your side, not only you’ll be able to maximise all of the deductions but also experience a peace of mind.
And when treated with respect, tax time is as much a part of building your home-based business for the long haul as it is about compliance.