What costs can I include as expenses for my new business start up?
Are you thinking of starting a new business?
Do you need to know what costs you can and can’t include?
This guide gives you a quick and basic summary of allowable expenses that you can include in your business.
Most new start ups incur a certain amount of costs before they’ve even become operational. These costs are usually linked to setting up domain names, registering the company buying equipment etc and all of these can be included as allowable expenses in your business as expenditure on day one of your business being operational.
Additional examples of allowable expenses include (but are not limited to) are computer equipment and software, any training expenses, stationery / office costs and travel costs
It’s important that you keep detailed and appropriate records of all expenditure you incur before you formally set up your Limited Company.
For ease, it can be sensible to set up a separate business bank account to log all of these expenses, keeping receipts or detailed spreadsheets including details of all expenses.
Once you’re operational, your expenses are likely to increase significantly. The most important thing to remember when you’re incurring costs for running your business is that any expenditure needs to be incurred “wholly and exclusively” in the course of your business.
For example, if you are purchasing stock items in order to sell, the costs of the stock goods are fully allowable expenditure.
If you have a mobile phone that you use for personal and business purposes, only the business-related costs can be included in your allowable expenses.
Larger One-off Costs
These are often referred to as “capital allowances” and are a type of tax relief for a business – you are able to deduct some or all of the value of the item from your profits before you pay any tax. This can apply to:
There are a few different approaches that are available which all allow you to claim different amounts. Which method you use can depend on how much the capital item is and how much profit you have made in that period.
Once you’ve decided to start your own business, you need to consider these 5 financial priorities: