As an entrepreneur, you can purchase a lot of items that help you build your business. For some expenses, it is obvious that they are entirely devoted to your business: think of the purchase of small office equipment, some trade goods, and so on.
To put it nicely: their professional use percentage is 100%. If you made an expense of 50 euros with a professional percentage of 100%, that 50 euros will count entirely as a professional expense for your accounts. More expenses, in turn, means less profit and therefore less personal income tax and less social security contributions.
If you are in doubt about whether a cost is allowed in your accounts, ask yourself the next question: would I have incurred the cost even if I were not self-employed? If the answer is no, then the cost may be deducted in full from your profit. If the answer is yes, then you may still be allowed to stop some of the cost in accounts. Your mobile phone subscription, for example, you make a lot of calls to friends and family, but obviously sometimes to customers and suppliers.
Not obvious to estimate a professional use percentage for such expenses. In other words, what percentage of your monthly mobile phone subscription do we take into account for accounting purposes (a professional expense) and what percentage do we estimate as private use?
Estimate professional use from your expenses honestly!
Pinning down an exact professional use percentage is an impossible task, and fortunately the tax administration knows it. Take a moment to think about each cost category, make an honest assessment of the split between your professional use and private use, fill in the professional use percentage and let’s go!
Tip of the day:
Be honest with yourself!
We’ll get you started anyway
For expenses related to your home – think of your electricity, heating, fire insurance, property tax, etc – you can take into account the amount of square metres your profession occupies compared to the total habitable area of your home.
Think of the square metres of your office space, some storage of materials in the garage and a few square metres of your living space, because even there you sometimes sit with your laptop answering emails. Compare this sum with the habitable area of your home and that is your professional use percentage for these expenses.
For your car expenses , for example, you can fall back on an estimate of the amount of kilometres you travel for your self-employed activities.
And for your mobile phone subscription, internet costs and other mixed expenses? Make an honest estimate, certainly do not exaggerate and take into account your practised activities, the time you actually spend on your business, and so on. But above all, realise that it will always remain an estimate and fortunately the tax authorities know that too.
Curious what professional use percentages other entrepreneurs apply? Or would you still like to remove that last drop of uncertainty before entering your mobile phone subscription in Dexxter? Feel free to question your fellow entrepreneurs via the Dexxter community!
