​​”Write it off!” What does this mean and what can you write off anyway?

Straight Up Small Business

We hear the term “write it off” thrown around a lot but I think many business owners don’t really understand what legitimate tax write-offs are. There is a lot of confusion around the scope of what you can write off in your business so in this episode, I want to share some clarity on the subject.

For the most part, I think business owners are overly optimistic about what a legitimate business expense is. Many business owners confuse personal expenses with items that can be claimed as tax deductions in their business. But as a business owner, it’s really important that you understand the difference.

Today, I’m sharing some practical examples of things I often see in my work as a bookkeeper and some insights on what you can put through your business account.

I give an overview on:

• What writing off an expense through your business actually means.
• Purchasing upfront through Profit and Loss and depreciation methods.
• The benefits of tax deductions and why a lot of business owners are optimistic about what the benefits are.
• What legitimate business expenses are. You can only claim a tax deduction for an expense that needs to be incurred to earn your accessible income.
• Expenses I often see in my bookkeeping work that aren’t legitimate tax deductible expenses.

At the end of the day, common sense prevails most of the time. Always ask yourself, “do I need to incur this expense to earn my accessible income?” If the answer is yes, it’s likely that it’s a legitimate business expense.

If the answer is no, you’re probably looking at a personal expense which cannot be claimed as a tax deduction.

I hope this episode gives you clarity on the topic of tax deductions and gives you an understanding of what you can and cannot “write off” in your business.

LINKS:

Previous episode mentioned:

Bookkeeping for Christmas parties, Christmas gifts and entertainment expenses

https://www.youtube.com/watch?v=hg1Uk60rBsc

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Where to Find Bec:

• Website: https://straightupbookkeeping.com.au/
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