What expenses can you put through your business?

Straight Up Small Business

- I would like to acknowledge the traditional custodians of the land on which I recorded this episode, the Coodjinburra People of the Bundjalung Nation, and the land on which you're listening to it. I pay my respects to the elders, past and present, of those lands. I extend that respect to all Aboriginal and Torres Strait Islander listeners. Thank you for sharing this space with me. -
I regularly come up against a lot of confusion around what expenses should and shouldn’t be put through a business. Today, I want to shed some light on this topic so you can head into the holiday season with clarity and set yourself up for a successful year to come.
At the core of running a successful business is understanding your finances, and that means knowing how to handle expenses. Business expenses are costs incurred in the operation of your business. They play a crucial role in determining your business's financial health and you may be eligible for tax deductions on certain expenses.
However, it's not a free-for-all. There are rules governing what can be considered a legitimate business expense. Ask yourself, if the ATO were to audit your business, would all your expenses hold up as business-related? For instance, buying a dress for a photoshoot makes sense as a business expense, but claiming ten dresses over two months for the same photoshoot? Not so much.
The Australian Taxation Office has laid out three golden rules for work-related expense deductibility, and I take you through each one so that you can get clear on what are considered legitimate business expenses. These include things like everyday operating costs, training, product purchases and travel expenses.
Now, it’s tempting to get a little creative when it comes to claiming expenses. It may seem harmless to claim that daily coffee run or a couple of team golf days, however the ATO’s guidelines are there for a reason, and you want to do your best to avoid getting into any sticky tax-related situations. I dive into the types of expenses that won’t pass as tax-deductible, and clarify some areas that can be confusing or tricky to navigate.
When in doubt, consult your tax accountant - this will help ensure your business stays financially healthy and in the clear come audit or tax time.
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Previous episode mentioned: Bookkeeping for Christmas parties, Christmas gifts and entertainment expenses
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