The most important formula in entrepreneurship
Let’s start with an essential formula:
Turnover – deductible expenses = profit for your accounting!
On that profit, you pay taxes as an entrepreneur. The less profit, the less taxes. That’s why it’s best to put all your business expenses into your accounts. Both starting entrepreneurs and experienced business owners occasionally hesitate whether or not a particular expense should be included in their accounting.
Items such as office equipment or trade goods (goods that you resell), are evident as professional expenses. You incurred these expenses entirely for the purpose of your business. When you purchase items that you also use in your private life, it is often less obvious to determine whether they are allowed in your accounting and for what percentage.
Did you know?
Every business has different activities: a personal trainer will be able to deduct his sports subscription, a lawyer will not.
Some examples of expenses for your accounting
Therefore, we made a list of things that you often need as an entrepreneur, although they often do not have anything directly to do with your self-employed activity.
We notice that they are too often forgotten for this very reason. This is such a shame, because you may very well include them (partially) in the accounts of your sole proprietorship.
Your car
The purchase of a car, maintenance costs, insurance, fuel costs, the annual road tax & the one-off vehicle registration tax. Note that this is where the percentage of professional use plays a role.
Your home
You can deduct many costs relating to your home: electricity, gas, internet, water, (fire) insurance, property tax (the cadastral income), maintenance work, etc.
Attention, because the percentage of professional use also applies here. You can estimate the professional percentage of these costs, for example, by comparing the square meters of professional spaces with the total habitable surface area of your home. The percentage you find can then serve as the percentage of professional use for your housing costs.
In the case of a sole proprietorship, it is better not to deduct the rent or purchase of the home.
On the other hand, if you have construction work done that is specifically related to a 100% professional space, then of course you may go for a percentage of professional use of 100%.
Your books, trainings and membership fees
All costs related to books and trainings in function of your self-employed activity, but also for example membership fees of associations, as long as they are in the context of your self-employed activity.
Tip from an accountant
As an architect, feel free to deduct your architecture books.
Cell phone & laptop
The purchase of a cell phone and laptop, but don’t forget your mobile subscription and certain software costs for your laptop. You will not be allowed to deduct them all at once, but you will have to depreciate them.
Your website
Consider not only the cost of having your website created, but also the cost of your domain name, the hosting of your website, and transaction fees for purchases.
Restaurant expenses
Did you go out for dinner with a (potential) customer, supplier or other business relation? If you can demonstrate the professional added value of your restaurant visit, it will have its place in your accounts. Know that demonstrating professional added value is not an exact science, but rather context you add to it.
To kill a persistent myth once and for all: restaurant expenses during the weekend can also be included in your accounting! As long as you can prove the professional motive. For example, you can add a small note when you enter the expense in Dexxter. That way, if you are audited later, you will remember whom you went to dinner with and why.
Bank charges
As an entrepreneur you have a bank account, whether you have chosen a separate (professional) bank account or not. With a lot of banks, your bank account also has a monthly or annual charge, which has its place in your accounting. You don’t get an invoice for it, but through an extract from your bank account, you can also enter this cost in your books.
Tip from an accountant
Your electricity, water and internet can all be deducted as well, especially don’t forget to include these costs.
Furnishing costs
Your professional spaces should also create a certain ambience and conviviality for your customers and suppliers. For example, some (ambient) lighting, a flower arrangement,…
It’s clear that as a business owner you can enter a lot of costs into your accounting, but always remain honest and accurate when estimating your costs!
Accounting costs
Of course, your accounting costs are also allowed in your accounts. You can choose to hire an accountant or to do the accounting yourself. All of these costs are purely professional and therefore you can deduct 100% of them.
Business travel
Maybe your pleasure trip is also partly professional? For example, are you a yoga teacher and will you be taking classes in Morocco? Or do you have plans to network in a neighboring country? Maybe you’re going to brainstorm with other entrepreneurs while traveling? Or you have an important conference in China?
If so, you will be able to deduct a percentage of your trip as an expense. Think about your airfare, accommodation and meals, for example. How much exactly? That’s up to you to determine.
Should I intentionally incur extra expenses?
No, this is not a good idea. If you incur extra expenses, you will still have to pay them. Although you will have to pay less taxes, you will also have less profit.
So only incur expenses that are useful to your business. But most importantly: don’t forget to submit the expenses you incurred to Dexxter.
Did you know 😮
You can collect your invoices in several ways: snap a photo via the Dexxter app, forward them to your Dexxter email, or upload a document.
Feel like getting started as an entrepreneur?
Thinking about your turnover, costs, profits… It can make you feel inspired to launch your own business!
At Dexxter, we help beginning entrepreneurs get started. For instance, we have created a starter’s guide packed with tips. Thanks to Dexxter, you can also keep your accounting costs low. Plus, through your account you have access to a free invoicing program. How convenient!
Ready to go for it? Through a recognized enterprise counter, you can set up a sole proprietorship in no time. You can contact, for example, Acerta, Liantis or Xerius.
