Yes, if these expenses are related to your self-employment, they are allowed in your accounts. Below we explain how it works. Are you in doubt whether they are professional expenses? More info here.
Even if you do not yet have a company number at the time of purchase, you can still include these purchases in your accounts.
Say you are starting out as a freelance photographer, your company number has been applied for, you just have to wait until the administration is in order. Then you can already buy something for your yet-to-be-started sole proprietorship. Just buy what you need and ideally have the invoice say somewhere on it: “Company number pending“.
That way it is immediately clear that you have purchased something in anticipation of starting your self-employed activity.
What about VAT administration?
If you are launching an activity subject to VAT, you can also recover VAT on a purchase made before the actual start-up.
The VAT administration is a bit stricter, though: it must be 100% clear that a purchase before the start-up was made specifically in function of your sole proprietorship. This can be done by having your supplier state “Company number pending” on the invoice.
If that is effectively the case, you can perfectly recover the VAT on such purchases in the first VAT return you will file.
And even older purchases?
Suppose you have had a laptop for a while, you are very satisfied with it and it still serves you perfectly. You will soon start your own business, but buying a new laptop immediately? It’s a bit early for that financially. So you just keep using your “old” laptop.
This old purchase can still be included in your accounts! Provided that you still have the original purchase invoice.
However, you may not use the original purchase amount, because probably your old purchase has already lost some of its value through use. Open some second-hand websites and look for a similar model in comparable condition.
The prices you can find there for a similar model can be used perfectly to enter your old purchase at its current market value as an expense in your accounts.
Tip! If you add such an expense to your accounting, upload both the original purchase invoice and the results from second-hand websites to show the current, market-based price that you include in your accounting.
This can be applied to a laptop, cell phone, car, furniture, etc.
In such a case, you will not be able to recover the VAT on this purchase.
You initially made this purchase as a private individual, without intending to use it professionally at the time of purchase. So no VAT deduction, the VAT administration is a bit stricter here.
But your old purchase, in our example the laptop, remains useful for your accounting! Recovering VAT is not an option, but you may enter the current, market-based value as an expense in your accounting for professional use.
How to do this practically in Dexxter?
You’re going to merge your original purchase invoice with the second-hand ads you found on online. You can easily do that through a website to merge PDFs. This way you have a single PDF, which you are going to upload in Dexxter.
Then you create yourself as a private supplier in step 1, supplier info. In step 2, basic information, you have to enter an invoice date, which is the date of your original purchase invoice. Under tax date, you choose the year from when you want this purchase to appear in your accounts.
Is your original invoice from 01/02/2022 and you start a business on 01/07/2023? Invoice date is then 01/02/2022, you set the tax date to 07/2023.
In the amounts in step 3, you enter the market value. That’s the value based on those second-hand ads you found. You can average the results of those ads here.
So you see, it is definitely useful to keep all your invoices. That way, you can still enter your purchases as an expense in your accounts, and in some cases also recover the VAT.
