Every business will have expenses in the line of carrying out their work. If you claim on them, you can offset the amount of tax you have to pay come Self Assessment time. This sounds great but can often lead people to overclaim in order to lower their tax bill.
The real trick is to be sensible and fair with what you’re trying to claim for. You don’t want to fall foul of the taxman and end up having to pay back taxes - or worse, face fines and penalties.
Check out our Knowledge articles to find out what expenses you can claim as a limited company and as a sole trader. If you’re ever unsure, just get in touch with us - we’re here to help you.
How do I log these in Freeagent?
The Freeagent software available as part of your Crunch Sole Trader package, separates expenses into three categories: Expenses, Bills and Bank Payments.
Expenses - If you’ve paid for an item on behalf of your company (otherwise known as an ‘out of pocket expense’) you should enter this as an expense.
Bills - These are items or services that you’ve already received, but don’t have to pay for right away (i.e you’ve been invoiced for an item, but have 30 days to pay.). These should be entered as Bills and must be paid from your business account, not your personal funds.
Bank Payments - These are purchases made from your business account and can be recorded manually or directly off your bank statement (providing you’ve uploaded a statement or enabled your bank feed).
When entering any purchase, you’ll need to try to find an appropriate category that fits. The category list is extensive but if you’re ever unsure, just get in touch with us via firstname.lastname@example.org.