Miscellaneous Business Expenses: Are You Paying More Than You Need?steemCreated with Sketch.

in business •  7 years ago 

No matter the size of your business, whether you’re a multi-national blue-chip conglomerate or a start-up, calculating cost is paramount. The adage that you must spend money to make money is true regardless of sector, service or length of time trading. In short, business expenses are unavoidable.

But, here lies the question, what are essential and non-essential business expenses? Here’s a look at how you can use shrewd financial knowledge to make sure that you maximise profit by keeping your expenses low.

What are Deductible Business Expenses?

You may not be aware but unlike personal expenses, for the most part business expenses are deductible. There is a clear definition between expenses and purchases, and sadly, purchases aren’t deductible.

If you’re unsure about what expenses are deductible, it’s wise to check with your accountant or tax advisor. Their expertise will be able to tell you what expenses are deductible and the expenses that you’re financially responsible for. You can also check on the government's website at pages such as this one for self employed expensesthis one for self employed expenses.

What are Miscellaneous Business Expenses?

All business expenses should be categorised when completing a tax return. Any expenses do not naturally fit into one group or another are categorised as ‘miscellaneous.’ Specific information can be found in the government's Business Income Manual.

Keeping track of these expenses is essential to ensuring sound financial management. Often these expenses are negligible, however they can increase to a significant amount of money if not accurately calculated. Meticulously categorising miscellaneous business expenses will make sure that no financial irregularities ever appear on your accounts.

New receipt scanning technology is one of the most effect ways to record business expenses. Using optical character recognition (OCR) technology, you can accurately scan record all your expenses – ensuring that not a single transaction is miscalculated or lost.

Examples of Miscellaneous Business Expenses

The most obvious example of what’s classed as a miscellaneous business cost is travel. Whether paying for a flight or driving for a meeting, all costs associated with the journey should be classed as a miscellaneous business expense.

For this reason, it’s imperative that professionals use an app with an OCR receipt scanner to keep track of all their transactions. Paper receipts are easily lost or discarded. Scanning receipts and holding all data in an app will make sure that accurate reimbursement of all expenses is always made.

Education and training expenses are also categorised as miscellaneous – providing that there is reasonable evidence that the training maintains or improves upon the existing skills, or necessary for legal and regulatory purposes.

Miscellaneous business expenses also include any utilities costs for your workplace. These expenses include light, heat, power, telephones and water costs. This is especially important for those who have a home office. With a receipt as evidence of the expenses, businesses can have an utilities costs reimbursed.

The cost of licences, and any regulatory fees that are essential to a sector-specific business, are also classed as miscellaneous business expenses. This means that the amount can be fully reimbursed.

In addition, some licences can be amortized which means that the balance of the licence or fees can be paid off over a pre-determined period with regular payments – however this doesn’t affect your entitlement to have the full amount reimbursed.

These are just some of the miscellaneous expenses that businesses can have reimbursed. You can see why keeping track off all your expenses is paramount to ensuring sound business financial practice. A reliable receipt scanning app can not only help you to save money, but be an essential element to sound business financial management.

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Hola @matmayer, upv0t3
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