Business Expenses; Allowable or Disallowable

In order to fully discuss and examine business expenses, the accounting definition of expenses as to be identified. This will help determine what expenses are allowable (deemed acceptable by HMRC) and disallowed (expenses that cannot be credited in the financial statements).

Business expense in accounting can be defined as an outflow of money or an asset to perhaps a supplier in exchange for goods or a service. Some accountants would add to this definition, and say that an expense is when any form of liability is incurred. So therefore an expense is a loss to the business proprietor because it decreases the owner's equity.

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Allowable Expenses 

An allowable business expenses are incurred only for the business's purposes or needs. This is usually phrased as 'wholly and exclusively' spending or expenditure which are tax deductible. This is relatively easy, anything that adds value to the business is an expense. Common expenses such as lighting & heating costs, office stationery, business travel & subsistence (food and drink) and rent can be found in almost every business or company.

Taking taxation into consideration, there is not as straight forward application. This is due to expenses that may have a business and personal component, which is trickier to determine and apply.

This will prove harder for business owners or self-employed people to differentiate or draw the line between personal and business costs. For example a company car can also be used as the family car by the owner of the business.

Disallowable Expenses 

Disallowable expenses are expenses that are not incurred "wholly and exclusively" for business and trade purposes. Examples of disallowable expenditure are; council tax for your house, clothes not part of uniform, entertaining, donations to charities and your salary if you are the business owner.

These expenses are not allowable because they are not acquired for the company's uses or benefit. The tax return form indicates what expenses are allowable. this will therefore give you a strong indication of what expenditure that HMRC will permit or  accept.

Wholly and Exclusively

This is very applicable to self-employed people because the lines can get blurry or crossed as to a business expense is and a personal expense. For business owners it is of great benefit if an expense can be both business and personal. Apportion is a term used in accounting when an expense meets the requirements to be the 'wholly and exclusively', then people (self -employed) can claim a tax deduction. 

An example of apportion in practice is Mike, who is a self-employed plumber. Mike owns only one van that he uses to carry his tools and to drive to and from his client’s homes. However he also uses it in his personal life to pick his son up from school. It is clear which instances he uses is van for business and which he uses for is personal life. So in this scenario, Mike's journey to work will be classed as 'wholly and exclusively' because it meets HMRC requirements and the percentage of the cost should be deducted from the business's expense. So the journey he makes in his business life such as picking his son up from school can be deducted and classified as a business expense. 

In order to calculate these types of expenses, HMRC advises that people should monitor their usage over a specific period of time in order to determine the total amount of expenses that is deductible.

Duality is a concept used to explain expenses that have a dual purpose, meaning they serve both personal and business needs. This means that they are not deemed to meet 'wholly and exclusively' rule. So this therefore suggests that not all scenarios are as clear cut as Mike's.

Let’s take Jane for example is a detective and has a smart dress code, this means that she will have to buy a lot suits and office acceptable outfits. Even though Jane only wears suits for work they do not meet the requirements to be 'wholly and exclusively'.

However if she was just a patrol officer she would need to wear a helmet and protective clothing (such as bullet proof vest). Any uniforms costs like this will be classified as a business expense. 

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Published on: 02/08/2016

Disclaimer: The information provided in this blog is brought to you by Taj Accountants. As you are reading this blog of your own free will, any information taken from this blog is at your risk. Before using the information provided to apply, to your business seek professional or legal advice. Taj accountants will not be liable for any damages. 

Importance of Small Business Accountants for Operation of Business and Convenience

Accounting is an imperative function that must be performed by trained workers in order to maintain a proper record of all the financial transactions and other related events. It is required in every organization, be it a small enterprise or a large scale industry. Such professionals are necessary for designing and implementation of techniques for keeping accurate accounting details. They manage and analyze financial reports for businesses, authorities. There are certain norms and regulations which need to be abided by all types of industries and these are known as accounting standards.

How is the Small Business Accountants Helpful?

Accountants are required in every organization to escalate the financial prospects of the organizations. Therefore, small scale businesses also need small business accountants to look after their accounting areas. They help such small and start-up organizations to organize their fiscal assets in the most lucrative sectors so that you can earn greater money from these assets. They plan out strategies for you to enable you to save larger amounts of money to invest in future ventures. They function as proactive and proficient accountants throughout without letting you find any complaints regarding their work style.

Such professionals offer technical support to the clients who are at the initial stage of business. They assist their clients to develop a pragmatic approach for the financial wealth they possess and strengthen their economic structure. They help a lot in building an efficient business set-up for you so that your new enterprise can take-off well. They conceive intelligent solutions for their clients and strive hard to help them manage smooth running of their endeavour.

Functions of Small Business Accountants

The small business accountants perform innumerable functions that are extremely significant for the proper functioning of an organization. They guide their clients regarding the statutory norms and rules that they need to follow in purview of an efficient industrial framework. The diversified services offered by these professionals include compilation of your account details. In this way you are relieved of the burden of hiring an accountant at your cost. Further, they aid in tax manipulation and keep you updated with the tax liabilities incurred upon you. They also keep you informed of your VAT returns. You have to keep least troubles in filing your Vat returns to the relevant authorities. Moreover, an adequate and effective means of bookkeeping is provided by these accountants. This enables you to concentrate all your attention in chalking out new plans and policies for your company rather than getting baffled about your economic concerns. All the issues pertaining to your accounts and other financial events are the responsibilities of these expert officers and will give you satisfactory results.

Conclusion

It can be inferred from above that business accountants are essential for proper operation of a corporate organization. If you are a novice in the corporate sector then you surely need the assistance of such trained professionals. They will help you to enlarge your business prospects at the global level and also equip you with the best solutions to safeguard your financial belongings.


Disclaimer: The information provided in this blog is brought to you by Taj Accountants. As you are reading this blog of your own free will, any information taken from this blog is at your risk. Before using the information provided to apply, to your business seek professional or legal advice. Taj accountants will not be liable for any damages. 

How To Work Out Business Success Strategies Through Refined Accounting Practices

Business activities have been a necessary adjunct of the civilizational history of humans. People were always engaged in serving products and services to others in one form or the other and the most intrinsic component in all these maneuvers was the finance. The direction and dynamics of this entity determined the profit and loss equations for the bearer enterprise. No wonder then, finance was accorded the prime importance and determined the substance and vector of the enterprise and thus consequently its future too! With the passage of time the humans, sensing the significance of this parameter, devised strategies to diagnose the health of its finances from time to time!Accounting and precisely business accounting was that one field of academics that was developed over the time with this aim. While the earlier scene was dominated by the emergence of small business accountants, in the later stages full scale accounting firms also got established.

Development of Fine Accounting Tools of Universality!

In the modern business era that spans some two or three yester decades, the industrial differentiation has been a pronounced phenomenon while the related financial dynamics also got complex. Now the enterprises rely heavily on the borrowed finances from the lender institutions as also from the public through the equity! This emergent scene also necessitated some refined control and tracking measures so that the fiscal credibility of the firm is not endangered. Deliberate development of accounting standards as according to the differentiating sectors were put forth by the academia and professionals. Now these frontline practices are emulated the world over to create a level playing field as far as the validation of the financial operations of the multinationals and conglomerates is concerned. As for global accountants London has a special distinction on the world map as here the registered accounting firms are delivering accounting services as per the international guidelines of universal relevance!

Fine Accounting Techniques for SMBs

Small businesses created a niche space for them in most of the developing economies of the world including India and these now constitute a significant part of their respective economies. However for these start ups and nascent business of low value and turnover, finance mobilization has been a tough task. These firms today rely heavily on the accounting reports and consequent audit sheets to convince the public as also private lender agencies to get necessary funding for them! For small business accountants London academia and small business specialists have come together to generate the best set of accounting standards and practices so as to guarantee the suitable diagnosis of their financial health. These accounts cum audit reports are also leveraged as a certificate for showcasing the operational health and future prospects of the small enterprises.

Allied Services Being Served by the Accounting Vertical

Specializations have come up in the field of business accounting which is catering to a variety of needs of today’s enterprises. Taxation consultation has been recognized as an allied service and accounting firms work out the most suitable capex and investment plans for the firms so as to minimize their taxation burdens. Full fledged accounting services firm are catering as full time service providers for the companies. As for taxation accountants, east London has seen a concentration build up of certified accounting professionals which have specialized in multinational EXIM (export import) Taxation Accounting. A great deal of sophistication has therefore evolved to cater to the ever growing and complex needs of the companies in this era of globalization.

Wide Range Of Major Financial Services On Offer By Accountants London

Accountancy is an essential part of any kind of business. Making it further important for business is the fact that most of the business units have their separate accounts section, where variety of accounting works are handled, on a day to day basis. By keeping a strong accounting background, a company can progress further, as it is saved from unnecessary hassles of government rules and regulations.

With London being a financial centre of England and also of European nations, there are plenty of business operators in London. For them, keep a good profile of accountancy is important. For this reason, the accountants London are in high demand among the companies in London and surrounding areas. These experts in financial matters have a lot of offer in terms of services and variety in their work profile.

• Many functions of accountants London for effective financial guidance

Since the rules and regulations by the government authorities are being constantly reviewed, it is essential for a company to comply with the regulatory directives and give out reports on an annual basis or quarterly. These accountants London should be able to handle the financial advisory role for the company, for which they are working. This will require lots of knowledge, backing experience and also the wish to be on the toes for the benefits of the company. Besides, there are corporate taxations, value added taxes and employee records, which are needed to be maintained. For a large company, full time accountants London are necessary and these companies are making sure that they have the best team to handle the accounting work. 


Disclaimer: The information provided in this blog is brought to you by Taj Accountants. As you are reading this blog of your own free will, any information taken from this blog is at your risk. Before using the information provided to apply, to your business seek professional or legal advice. Taj accountants will not be liable for any damages. 

Accountants Getting Into Demand For Better Financial Functions Of The Business

Until the last couple of years, recession and lay-offs were the buzzword of the town. People were losing their jobs without knowing what hit them. As the economy stabilised and countries started regaining their financial independence, growth beguiles started playing loud and clear. It was time then to hire again. So, with the bettering of the economy, the first class of people, who were hired into companies, were the accountants. In London also, the same scenario followed, resulting in plenty of accountants London getting back into the job.

•   Handling newer rules and advanced responsibilities

Importance of qualified accountants can never be ruled out from a company’s logistics. With new rules being introduced and old laws getting amended, taxation policies and various other financial matters are needed to be reviewed constantly. It will be enough to give the company a right direction. In the entire sector of financial industry, the accountants are the ones, who have had a major run in job recruitment sector. By the working of proper accountancy, the companies can perform under stricter rules and financial laws.

•  Expanding job profile, better pay scales

Many aspects of company’s business are getting into the job profile of an accountant. In London, where companies are coming up in large numbers and many of the existing ones, expanding further, the accountants London are being given more responsibilities and work profiles. They are not simply restricted to book keeping and managing payrolls. Instead, their spectrum of activities has increased drastically and they are coming up as highly paid class of employees in an organisation.