What counts as a business expense?

[Finbarr Brady]

This is more a general business question than anything else.

I'm an iPhone developer. I own a company. What exactly are the types of things I can write off as a business expense on the books? I'd like to hear from people who have experience here, rather than guesses.

Let's start with the obvious ones:

• Office equipment (Mac's, monitors, cables, hubs etc).  I guess broadband also?
• Test devices (iPads, iPhones, iPods). Would things like headphones be acceptable even if I don't develop app's that interface with headphones?
• Developer fee's
• Coding books
• Are things like petrol, car costs, the odd meal for 2 (like meeting a client), covered?

I guess I know the obvious things, but am totally unsure about other things.

Anyway, if you know exactly what's covered, it would be great to share this with all here...

Cheers,

Finbarr

[Conor Winders]

All of the above.
Expense everything that can have any sort of reasonable explanation (headphones are a great example, you could have any number of reasons for needing them), but remember there are things you can't claim VAT on... like going on the piss (with a client of course)

[Finbarr Brady]

Conor Winders said:

All of the above.
Expense everything that can have any sort of reasonable explanation (headphones are a great example, you could have any number of reasons for needing them), but remember there are things you can't claim VAT on... like going on the piss (with a client of course)

Thanks for the info. So can something like car insurance or car tax be paid directly from company accounts?

(p.s. the company is not VAT registered yet so I won't be claiming VAT back on anything I'm afraid)

[Conor Winders]

You might have a hard time claiming that it is exclusively for business use but I'm not sure as I don't have an automobile of any sort on the road at the moment. I would imagine you could claim back off the business a (high) percentage and then the business mark that down as expenses, that's what I used to do when my bike was in action

[Damian OSuilleabhain]

Everything you have above is allowable, except for client entertainment. Can't claim that anymore. You can however claim staff entertainment which is one of the reasons why at OS3 we have an all expenses paid team lunch a couple of times per month.

Broadband, mobile, if you work from home 1/3 of your gas and electricity.

You can claim car insurance and car tax BUT you would then have to pay BIK as they are treated as another form of salary. It is much more tax efficient to pay the car tax and insurance yourself and claim back mileage for the journeys made visiting clients (and potential clients). You can claim at the same milage rate as civil servants without any questions being asked.

ALL apps you buy on iTunes are legitimate and necessary business expenses (research).

[Finbarr Brady]

Damian OSuilleabhain said:

ALL apps you buy on iTunes are legitimate and necessary business expenses (research).

Huh, that's a very good point! Thanks for all the info.

[Alan Duggan]

I presume you have an accountant to do your books for returns etc for the company. They can provide any and all detail on what's allowable or not and what rates are allowable ( for mileage for example). I would expect them to help you with that at no additional charge by the way! Don't be duped into paying for advice.

Any expense that you can stand over as a required expense for your business can be claimed against your company revenue. Costs allowed against tax are the cheapest you will have, particularly if you can claim the VAT back. The next cheapest costs are those the company has which are not allowable against tax - e.g. client entertainment. The most expensive costs you have are your own, i.e. those that come from your after tax monthly salary. So you want to push as much of your expenses into the allowed against taxes for the company category as possible. This isn't about tax evasion, it's about being tax efficient and remember the key measure of any of your expenses is whether or not you can stand over it if called to do so in an audit.

Gear, telephones, connectivity, travel, insurance (company), conferences, food, rent, heat, light, etc are all allowable and for many there are civil service rates that you should use as the limits of whats allowable against tax.

As Damian pointed out Cars are not such a good idea coz it gets counted as BIK so mileage at civil service rates is a better way to go. You may also want to look at things like Health insurance, pension stuff etc as there can be advantages with some of that as well.

A good accountant is what you need! And an easy measure is - they should save you more than they cost!

[Marian O'Shea]

Don't forget about subsistence allowances - if you travel for work e.g visit clients, attend conferences, xcake meetings etc., you can claim civil service subsistence rates depending on the time away from home. See
http://www.revenue.ie/en/tax/it/leaflets/it54.html
You can claim flat rate expenses irrespective of what you actually spend on accommodation.
Hope this helps,
Marian

[Finbarr Brady]

Thanks for the info Alan. Appreciated!

[Finbarr Brady]

Marian O'Shea said:

...

Thanks for the info Marian. Appreciated!