There are number of different strategies adopted by businesses to maximize their profits while concentrating on minimizing business expenses. From all these different strategies, one important way is to plan all the business expenses in such a way that you minimize your tax liability which ultimately results in higher profits.
Tax deductions are the amount of expenses incurred as part of your business and which are allowed to claim as deduction from your taxable income. So it is very important to plan all the business expenses according to applicable rules and regulations otherwise you cannot get any benefits from these expenses even if they are part of your business operations.
If you are in Australia, you can find all the details about claimable expenses on the Australian Taxation Office (ATO) website. Some of them are discussed below
Travel & Vehicle Expenses:
The travel and vehicle expenses incurred during the course of business operations are claimable, but there should be a proper record for all the related expenses. For example, if a company uses its own vehicles for traveling and transportation, then all the maintenance and fuel expenses are allowed to deduct from your taxable income.
So it is very important to keep record of all the traveling expenses incurred during the course of business to attain maximum tax deductions.
Staff Salaries and Wages Expenses:
All the staff salaries and wages of business entities are allowed to be deducted from the total income to get the actual taxable income. Salaries and wages include all the basic pay, commissions, bonuses and any other special benefit allowed to employees.
Hence, there must be a proper payroll register with all the necessary documents so that the business can claim the available deduction at the time of tax return.
Uniform and Laundry Expenses:
The expenses incurred related to purchase of new or special type uniform for employees for working on the field are claimable. You can also claim any expense incurred on laundry and dry cleaning of your employees uniform. To claim these expenses you have to keep all the bills and invoices coming from your suppliers.
Expenses Related to Equipment and Tools:
Businesses must keep all records of equipment and tools purchased for business purposes as they are claimable against your total income. It may include the depreciation expense computed on the value of fixed equipment.
The cost of supplies used to help in running business operations is claimable;for example, cleaning supplies used in hospitals. There are different rules for claiming supply expenses in the tax return by every country. So business should plan their supply expenses accordingly to get most of the benefit in tax deductions.
Claimable Taxable Expenses:
Business owners also pay different kind of taxes during the year in the normal course of business. These expenses are allowed to be deducted directly from the business net income. It may include the silence fee, regulatory fees and taxes and employer share of FICA, FUTA and other state taxes. As every country has their own rules for deductible expenses, so you should study or consult a tax consultant in your niche to help you in understanding all the deductible taxes allowed in the industry you are conducting your business activities.