Business Expenses For The Self-Employed: Our Top Tips
Self-employed business people are brave individuals. The resourcefulness of a self-employed professional is unmatched.
However, there are many learning curves on their entrepreneurial journey, and it’s essential to mitigate risks whenever necessary. Many of these perils occur on the expenses side of things.
At the end of last year, reports surface that more than a quarter of self-employed people struggled to pay for essentials, despite marginally improved incomes. If they are struggling to fund rent and bill payments, then the question of sustaining a professional endeavour becomes more complicated.
If you’re hoping to succeed with your own self-employed aspirations, then much of your success will be derived from your ability to manage your business expenses. Here are some tips to help you with this aim.
Hire an Accountant
Though self-employed people can seem like solitary individuals, they’re not always necessarily operating alone. They will work with other professionals to source guidance and acquire support in key tasks.
One such task is managing their finances and, by extension, their expenses. The Financial Times noted that while beginners in the self-employed circle may use a financial app to analyse their data, accountants go the extra mile by informing clients about tax allowances and other expenses shortcuts.
Don’t shy away from asking for help. If your pride is an issue, try to set those petty grievances aside. It’s a time of economic strife, and there truly is no room for half measures, so hiring an expert accountant who can keep you informed about all expenses-related matters is vital. Ask plenty of questions, be prepared to learn from them, and make the most of that dynamic.
Keep in mind that you can also claim costs for hiring accountants, so long as they’re only operating in a strictly business-related capacity for you. That knowledge can give you greater confidence in seeking outside support.
Research What You Can Claim
The claims process is thorough and rigorous. There are certain rules that you must abide by without exception.
Of course, claiming for business expenses will also go more smoothly if you set reasonable expectations and know how to navigate things. Self-employed business people can usually claim for things like travel costs, office supplies, purchasing uniforms, marketing, training, and more. As you can see, it’s a wide encompassing area.
That said, exceptions do apply, and not every aspect of entrepreneurship is covered. If you have any lingering doubts after your research, you should contact the Self Assessment helpline to clarify the costs you can or can’t claim for. Make certain that you abide by the law at every turn. Consider also that double-checking your efforts can give you confidence, too, and help you be more sure of yourself and your venture.
Remember that you can only make claims for the activities you undertake for business purposes. If you use a vehicle for travel in both a personal and professional capacity, you can only deduct expenses on the business side of things.
Budget and Audit
You can only make claims if your estimations are accurate. Therefore, it’s important to keep a log of all your expenses so that you’re not panicking at the eleventh hour.
Budget and audit your firm at regular interims. Hopefully, if you’ve appointed an accountant, they can oversee much of this process. Still, it’s a good idea to keep your own logs and to pass them on to them. It’ll generally speed everything up and ensure you’re reimbursed for any authorised expenses all the sooner.
Try not to let your accountant do everything. It’s a good idea to be as financially-minded as possible as a self-employed professional. That way, you can refine your working knowledge of all aspects of your business and view your expenses with the mature and reasoned mindset they require. Budgeting and auditing is great way to educate yourself on these points.
It’s also a good idea to organise payments in order of importance. Certain bills and taxes will be more vital to pay off early, and so will any charges that incur higher interest rates. Tend to these matters first where you’re able, and use budgeting and auditing techniques to set those priorities.
Use the Right Cards
There is a range of different cards to make payments with. Some options will be more suitable than others for self-employed business expenses.
Innovate with your solutions here, as all good businesspeople must. Offer employees virtual company focused cards from providers like Payhawk. Replace the need for expense reports and apps. Bill payments and reimbursements are more effectively managed, giving you greater control of your firm’s financial dealings. The cards are just the start of a highly in-depth software service, with time-saving automation technologies also a crucial feature.
Time is money in the business environment. Moreover, many entrepreneurs are being tested rigorously daily. To have resources such as these at your disposal can be a huge asset, not only in how you manage your expenses but also your general workload and, by extension, your work-life balance. Everything is made easier here, and that alone is worth your attention.
Respect that technology is having an increasingly more predominant role in business too. Anything that helps you save time and money can give you a competitive edge in your industry, so it’s important to evolve your self-employment strategies with the times.
Talk to Loved Ones
Many self-employed people dip into their own pockets to get their businesses off the ground. Though you can claim back many of these expenses, there are periods where it might seem like you’re on shaky ground, albeit briefly.
Therefore, you should try to alleviate any concerns your partner, spouse, or family members may have. They may not necessarily be fully aware of the rules around expenses. If you’re funding different aspects of your business with your personal savings allowance, they need to be assured that those costs will be claimed where possible and at least worthwhile.
Communication is key as a self-employed individual, especially if your decisions around expenses affect people in your life, even temporarily. Being mindful of others can also reduce the level of pressure and stress that you feel, especially when you’re not drawn into keeping secrets or feeling shameful about your strategies.
Try to practice patience during this time. Of course, you shouldn’t divulge crucial information with people you don’t trust. Ask those you do keep informed to practice discretion themselves, too, and not to share what you have. In the end, if you look for empathy and understanding with your loved ones, you’re bound to find it, which counts for a lot in more pressing financial circumstances.
Look to the Future
Once you have accountants onboard, claims in motion, and budgeting techniques in hand, you can start to craft a more reliable future yourself as a self-employed individual. The stars should begin to align.
If you’re fortunate enough to arrive at this crossover, then try to use the situation to your advantage. For instance, once business expenses are all accounted for, you can then start to set aside money for future holidays, retirement plans, or funding your kid’s education. There is an endless plethora of possibilities here, and they can all be made possible by how well you manage your expenses.
Use these factors as motivation where possible. Every aspect of finance can be overwhelming and tedious at points, but once you remember what it’s all for, things can soon fall into place after that.
