As an entrepreneur, you can purchase many items that help you grow your business. With some expenses, it’s clear that you’re buying them solely for your business. Think of the products you sell in your store, small office supplies, business cards…
Such purchases are entirely for the benefit of your business, so the cost can be counted in full in your accounting. This means that the professional use is 100%.
For example, if you incurred an expense of 50 euros with a professional use percentage of 100%, those 50 euros count in full as an expense in your accounting.
More expenses mean less profit, which means you have to pay less personal income tax and fewer social security contributions. So that’s a good thing!
Unfortunately, not every expense can be fully deducted in your accounting. For example, some items you purchase will be used for both personal and business purposes. Think of your cell phone, electricity, your bicycle… or your cell phone plan, for instance. You make a lot of calls to friends and family, but of course also to clients and suppliers from time to time. But what percentage of these expenses can you claim in your accounting?
Tip of the day
If you’re unsure what percentage of an expense to include in your accounting, ask yourself the following question: Would I have incurred this expense if I weren’t self-employed?
If the answer is no, then you can claim 100% of the expense.
There are also many purchases that aren’t purely business-related. The law doesn’t specify exactly what percentage of each purchase you can claim. So you’ll have to estimate this percentage yourself. In other words, what percentage of your monthly cell phone plan can you claim for business purposes (a professional expense), and what percentage do you estimate as personal use?
Be honest when estimating the professional use of your expenses!
Pinpointing the exact percentage of professional use is an impossible task, and fortunately, the tax authorities know that too. So there’s no need to worry!
Take a moment to consider each cost category, make an honest estimate of the split between professional and private use, enter the percentage of professional use, and you’ll be just fine!
Tip from a tax auditor
Be honest in your bookkeeping! In the event of a tax audit, the burden of proof is on you.
Guidelines for the professional use percentage of expenses
Professional use of your home
For expenses related to your home, such as electricity, heating, fire insurance, property tax, etc., you can calculate the deduction based on the number of square meters used for professional purposes compared to the total living area of your home.
Take into account the square meters of your office space, some storage of materials in your garage, and a few square meters of your living space, since you might occasionally sit there with your laptop answering emails. Compare this total to the total living area of your home, and that is your percentage of business use for these expenses.
Professional use of your car
For your car expenses, you can, for example, estimate the number of kilometers you drive for your self-employed activities.
Professional use based on the number of days worked
And what about your cell phone plan, internet costs, and other mixed expenses? Make a fair estimate—be sure not to exaggerate—and take into account the nature of your business and the time you actually spend running it. But above all, remember that it’s always just an estimate, and fortunately, the tax authorities understand that too.
For example, are you a self-employed person in secondary occupation and do you work two days a week on your business? Then you could claim 2/7 of your cell phone plan, which is about 29%.
Compare professional use with other entrepreneurs
Curious about the percentages of professional use other entrepreneurs apply? Or would you like to eliminate that last bit of uncertainty before entering your cell phone plan in Dexxter? Feel free to ask your fellow entrepreneurs in the Dexxter community!
