Being self-employed is awesome. There are so many benefits but one of the best ones is that you can offset a lot of things you buy for the business. This doesn’t just mean equipment, it can be anything from miles on a bicycle to printer ink. I have to stress that you cannot claim for things that are not for the business, that’s illegal, but if you buy it for the business then claim for as much as you can! This post is all about Deducting Bakery Business Expenses and what you can actually claim for.
Check Your Local Government Guidelines
When I first started my business I really got into this subject and read as much as I could about it. I didn’t take things other people told me for granted, as most of them had never even been in business themselves. I discovered so many things can put on your expenses and it is important that you benefit from all of it. Most of the figures I will go through here will be applicable for the UK at the time of writing. You can keep up to date with changes to expenses in the UK at the government website link https://www.gov.uk/expenses-if-youre-self-employed/overview If you do not live in the UK then check out your local government agency who will be able to help you. Most countries will have a website with information on but failing that, a good accountant will provide you with all the to date information you need. This is just a guide based on my experience, so please make sure you check with your government office regarding anything Tax Related.
There will be a difference in what, and how, you claim for expenses, if you are a limited company, for example, I recommend an accountant right away. This post focuses on a sole trader or partnership using a ‘Cash Basis Accounting’ system. This is simply a system where you record money taken, less money spent, to give you a pre tax profit. Operating with a Cash Basis Accountancy system, means you don’t have to worry about ‘Capital Allowances’ which can get complicated and are why accountants exist! If you are a sole trader or partnership then you don’t have to worry about Capital Expenses for now.
Deducting Bakery Business Expenses
Here are the main things you can claim as allowable expense:
This includes everything you use in your office such as:
Phones fixed line and mobile
Stationary, envelopes etc
Printing, Ink, Cartridges, Paper etc
Computer software and license renewal payments
Anything you can think of that the office needs to function as a business
Fuel (Petrol or Diesel)
MOT and Servicing
Hire car charges
Meals on Overnight Business Trips
Unfortunately, you cannot claim for Fines or Travelling between home and work.
You can also choose a ‘Per Mile’ option if you use a vehicle for work and personal use. This is easier than splitting the bills associated with the vehicle and much easier to account for. You just keep a log of how many miles you travel. At the moment in the UK it’s 45 pence per mile for the first 10,000 miles, then 25 pence a mile thereafter. A motorbike is a straight up 24 pence per mile and a bicycle is 20 pence per mile.
Costumes – it says for actors or entertainers which suggests mascots can fall into the entertainment category and if it doesn’t you can claim it as a marketing expense anyway.
Staff wages, Bonuses, Benefits and Pensions
Agency fees if using a recruitment agency
Employers National Insurance Contributions
Things You Buy To Sell
This will cover anything you buy to sell on such as:
Direct costs from production
Basically anything you hold as stock that you could sell
Financial and Legal Costs
If you do use the ‘Cash Basis Accounting’ then you can only claim for up to £500 specifically for interest and bank charges. All lease and hire purchase are separate to this restriction.
You can claim for:
Banking charges including overdraft and credit cards
Interest on loans related to the business
Hire purchase payments
Surveyors, architects and most other professional services in this manner
Maintenance of the building and equipment within it
Alterations and refits
Advertising and Marketing Costs
Unfortunately, you cannot claim for entertaining clients and customers. But you can claim for many other things including:
Advertising in newspapers, magazines, directories and pamphlets
Bulk mail shots, flyers, and promo cards
Filming and recording equipment for Youtube etc and all gadgets that the equipment uses including software, updates, and renewals.
Sponsorships (but not charitable donations)
Equipment, Machinery, and Tools
You can claim for anything you buy that is used in the business from a wooden spoon to an oven, a pencil to a laptop. You can even buy items from yourself at the beginning of your business but they have to be used solely for the business once the transaction with yourself is completed.
Personal Things Used For Business Too
If you have a personal mobile phone and you use it for business calls too, then you can split the payments and costs accordingly. This goes for any item you use for both business and personal use.
Books, Magazines, and Papers that are relevant and needed for work
Christmas Party (a few proviso’s – everyone who works with you must be invited (even people you don’t like) and at the moment the maximum per head is £150 in the UK. That’s some Vegan Dinner for up to £150 each!)
Annual Events such as a Summer Vegan BBQ
Course Fees that are work related. These can include overseas events so you can claim all travel expenses too.
Eye tests if you use a computer every day regularly. Glasses can’t be claimed, though, with the exception of safety glasses which can be.
Promotional Gifts for your customers but they must have some form of advertisement on or with them.
Working From Home
If you have a retail space but still work from home, then you can make a claim against heating, electricity, council tax, mortgage or rent, internet and telephone costs. There are formulas you can use to work out the proportion you should claim for each. They can be found on the UK government website here https://www.gov.uk/simpler-income-tax-simplified-expenses I haven’t included the formulas in this post as they do change and I don’t want to give you any information that is incorrect.
What Else Could You Include To Make This Work For Your Business?
This post has covered the main areas but I am sure you can think of many things you can add to it. If you think you might be able to claim certain things on your expenses but are not sure, I would advise getting in touch with an accountant or checking the www.gov.uk website in the UK, or your own government website if not in the UK.
You can see why the Politicians claim so much now and perhaps can see the potential to be a little sneaky. As long as you can show you have purchased something for business use and it stays within the business, pretty much most things can be claimed for as a business expense. I bet your mind is racing now, thinking of all the things you might include!