Keeping accounts as a self-employed student is really easy, let’s get right to the point! Especially if you are a student-entrepreneur relying on Dexxter, the digital accounting application to take control of your bookkeeping yourself!
With Dexxter , we created a simple accounting application specifically targeting the niche student-entrepreneur with sole proprietors!
But enough about Dexxter, because in this article we’re going to dwell on bringing in costs as a self-employed student! Because costs incurred as a self-employed student are therefore not always tax deductible.
Legal restrictions on the one hand.
On the one hand, because the tax authorities impose an amount of restrictions, these are simply legal restrictions, so you have no choice. Concrete example: restaurant costs are only 69% deductible. Even if those restaurant costs were 100% in character of your business (& therefore 100% professional), the ficus here still imposes a restriction of 69%.
By the way, those restrictions are not there specifically for you as a self-employed student, they are general for any self-employed person.
Now you can either go and look up a list of all these restrictions and apply them all the time or simply use Dexxter. This is because Dexxter keeps track of all these legal restrictions for you and applies them fully automatic. Handy, isn’t it?
Being able to prove it on the other hand…
Costs you want to stop in your accounts as a self-employed student, on the other hand, are not (fully) deductible because the tax authorities can also refuse the deduction of certain costs.
For example, if a self-employed student cannot prove that the costs incurred are effectively for his business. In other words, the taxman may thus refuse certain expenses if they turn out not to be professional expenses (or you cannot prove this sufficiently).
Still, a few nuances that we would like to explain! For example, during tax audits, the taxman is not allowed to judge the expediency of the expenses. So what exactly does such an opportunity assessment entail in practice?
Self-employed students: costs and the tax authorities
To begin, let us briefly give the definition of an accounting cost as it is stated in the rulebook. Not because that definition is important, rather to show how broad & vague it is.
Accounting costs are tax-deductible professional expenses only if they are done or borne in the taxable period to obtain or maintain taxable income (art. 49 ITC 92).
Of course, that still leaves a lot of room for interpretation and there will always be. After all, assessing whether something can be done in your accounts is never an exact science. Not even if, as a student-entrepreneur, you use the services of an accountant for this purpose; even then it remains an estimate (which actually comes from you).
Who proves?
The law places the burden of proof for professional expenses (costs that you will therefore contribute to your business) on the taxpayer, i.e. the entrepreneur. In practice, the tax authorities do more readily accept some costs as deductible expenses for your accounts. For example, auditors normally ask little or no questions when contributing office costs, administrative costs, purchases of trade goods, etc.
While they often do view costs from e.g. travel, gifts, restaurant costs etc. critically.
No opportunity judgment from tax authorities
The tax authorities should not make the deduction of expenses subject to an opportunity judgment. That is, the taxman may not disallow costs in your accounts because he does not see the usefulness or expediency of an expense. More on that in the examples below!
Of course, the finality condition may be considered when auditing. This, in turn, indicates that you can justify the expense. Don’t worry, this too will become clear in a moment via the examples below!
Examples of costs as a self-employed student
Laptop purchases 💻
There is a laptop in the accounts from 2,000 euros. Moreover, as a self-employed student, this purchase causes you to make a loss according to your accounts.
Final condition: the cost is allowed in your accounts, don’t worry! Quasi every entrepreneur needs a laptop to keep their accounts in order. So the justification of a laptop to maintain or increase your income is there.
Opportunity judgment: an auditor may not refuse to purchase that more expensive laptop because he does not see the point of it. So he may not judge that you could just as well have done your administration on paper, therefore should not have purchased the laptop and that you could have made a profit as a result.
Deductibility of car expenses 🚗
An inspector cannot refuse car expenses because, in his opinion, you could also have travelled by public transport or by bike (opportunity assessment).
As soon as you can prove that you made those car expenses to maintain or increase your income, they can be included in your accounts. Professional reasons for this could include visiting customers, suppliers, colleagues, …
An advertising campaign 📢
The cost of an advertising campaign should not be thrown out of your accounts because you cannot prove that it has led to an increase in your income.
You did embark on that advertising campaign because you were confident of maintaining or increasing your income as a result, which is enough to meet the finality requirement. If it turns out afterwards that income did not increase, that is still no reason for an auditor to throw those costs out of your accounts.
In fact, the tax authorities’ own administrative commentary states that auditors should not lose sight of the fact that costs do not always produce the desired results and that this in itself should not be an argument for rejecting them.
In conclusion, we would like to advise you to be careful not to exaggerate your professional expenses as a student-entrepreneur. Always make sure your costs remain reasonable and that you can justify why you did them in a professional context.
Dexxter quick courses 📄
Would you like some more information on entrepreneurship, bringing in expenses, personal income tax of a self-employed person with a sole proprietor etc.?
Then we have two quick courses ready for you packed with tips & tricks! Discover them here for a self-employed person subject to VAT and here for a self-employed person exempted from VAT.
But of course, as a student-entrepreneur you can also call on a number of ecosystems that can further support you during your journey as an entrepreneur, such as Gentrepreneur or SINC.
Nice to know is that Dexxter has an enabled collaboration with many of these ecosystems, which means that you as a student-entrepreneur can also claim a nice discount when buying an annual subscription.
Wondering if your school already has a partnership with Dexxter? Feel free to contact the person responsible for entrepreneurship at your school or comprehensive school.
