If you have plans to start a new business in the New Year, but you’ve been making preparations to get started, it’s normal for certain costs to be incurred in advance of the official start date for your business. Strictly speaking, there is no tax relief for these costs as no business exists.
But did you know that you can make a claim so that, provided the business actually starts, such costs can be treated as being incurred on the first day of your business? If not, you could be missing out on lots of tax saving expenditure.
Here are a few tips to make sure you’re getting all the tax relief possible:
- Expenditure incurred predating the start of your business can cover up to 7 years, provided that it is reasonable and can be properly supported
- Start keeping receipts and invoices for any costs you incur in the run up to the start of your business such as telephone, stationery, travel, motor and professional fees
- Finance costs incurred before your business starts but which form part of the business once it’s up and running can also qualify for tax relief, so keep copies of finance and loan agreements/statements
- You may also be able to claim a reasonable salary from your business if you are setting up a limited company, given that you (as director) will be spending time dealing with suppliers, bank, sales leads etc
A handy way to making sure you’re not missing out on valuable tax relief is to start using cloud and mobile apps straightaway to capture photos of your receipts ready to upload to your cloud bookkeeping system on day 1.
Talk to us at Cloud 360 Accounting about setting up Xero and/or Receipt Bank for your new venture even before you’re up and running.