Now that you have your own interior design business, whether or not you have already received any income, it is absolutely essential that you keep a record of all your expenses. If there's one thing more annoying than record keeping, it's paying unnecessary taxes because you didn't keep a proper record of your expenses.
What are expenses? Any money that you spend with the intention of earning income for your interior design business may be considered to be an expense for your business. Go back to the date upon which you set up your business and find all the receipts that show that you spent money for your company. If you cannot find receipts for some of the money you have spent then make a note of what the expense was for, to whom it was paid and the amount. You will find it easier to have a separate piece of paper for each expense.
From now on, ALWAYS get a receipt when you are spending money on your company, even if it is only for a cup of coffee. If you use a credit card and cannot find the credit card receipt, keep a copy of the credit card statement and highlight the entry.
I suggest that you obtain some file folders and label one for each month and keep receipts for in the correct file folder. Alternately, you may wish to keep a record of your expenses by category. This may simplify completion of your income tax return for your interior design business at the taxation year end.
A suggestion of the categories required are as follows:
- Advertising costs
- Business Taxes
- Business Licenses & Fees
- Business Dues and Subscriptions
- Business Meals & Entertainment Costs
- Business Memberships
- Home Entertainment
- Home Office Expenses
- Repairs & Maintenance
- Management & Administration Fees
- Motor Vehicle Expenses
- Legal Accounting & Professional Fees
- Real Estate Taxes
- Salaries, Wages & Benefits
- Travel Costs
- Telephone & Utilities
- Training Courses / Seminars / Meetings
If you are purchasing product for resale: Invoices for all purchases of products, including shipping costs. This will enable you to establish Cost of Goods Sold.
f you have inventory connected with your interior design business, you will need to count the stock that you have on hand at year end. Remember it may be possible that your design business may have a different taxation year end than you have personally.
While this list is not exhaustive, it does cover the main areas of permitted costs. Find out from your tax advisor what the depreciation charges are and what is allowed. Every country has wide ranging and differing rules in this respect. You will also need to maintain records of such capital costs that you might incur.
These will normally be for such items as:
- Office Furniture
- Office Equipment
- Computers, Printers and Peripherals
Taxation legislation differs between countries and each country may change their rules at any time. The information provided in these newsletters is accurate at time of publication. You should however seek specific information from your tax advisor or taxation department as it relates to your own situation each year that you are required to provide income and expense statements.
By John RitchiePhototgraphy by Gabriel Blaj
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