Wednesday, 7 Oct 2020
Although COVID-19 has made remote working the new norm, the concept of work from home had arrived long ago. Several self-employed individuals had leveraged the opportunity to start small businesses from their homes with the help of the internet and computer.
Starting from Steve Jobs to Jeff Bezos, some of the most prominent entrepreneurs in the world began their ventures from home. These days a laptop and a high-speed broadband connection are all that is required to start earning an income in Melbourne.
There are several advantages of home-based businesses, such as perfect work-life balance, the flexibility of work hours and comfort. Besides, you can also claim deductions for the costs incurred by the home-based business.
You can consult any of the bookkeeping services in Melbourne to understand which expenses can be claimed and which ones are not entitled. Usually, people are not aware of these deductions or get penalised for making incorrect claims. Thus let us help you with all the details of the deductions that can be claimed by home-based businesses.
Running your business from home in Melbourne involves trading exclusively from your residence. It could be a small retail business like an online books business with its principal office at home.
It could also include a workshop being set up at home by a skilled entrepreneur, such as a pottery workshop or a mobile repair workshop. It could also be a professional service provider or a medical practitioner using his home as a consulting office or clinic.
Thus you must have a room dedicated for business activities to claim the deductions. Also, your bookkeeper will help you to understand the capital gains tax and the main residence exemption, which is significant for home offices owners.
If you own a separate office, but you still work from home for a few hours, then you are eligible for deductions. One significant factor to consider is that you can claim only that expense which is directed towards the business.
For example, if you are using the phone to make both personal and business calls, then you can claim only those calls which were made for work. Your bookkeeper can come handy in keeping a record of the official calls to calculate the claim.
You must be clear about the expenses which are eligible for deductions, or you may end up getting penalised by the ATO. Your bookkeeper will keep you informed about them. Here are the expenses that can be claimed:
Your bookkeeper will help you to calculate your claim using the following methods:
Usually, any house owner selling his property is exempted from the capital gains tax because of the main residence exemption.
However, when the house is being used for operating a business without any other office in existence, then the owner will be eligible for only partial exemption. Thus you must get your property in Melbourne evaluated when you start using it as your primary office.
It will allow the bookkeeper to clearly define the capital gain or loss at the time of selling the property. Therefore, you will not end up losing money by paying extra capital gains tax. If you are an employee, then you will not have to deal with the capital gains tax.
The times are changing, and so are the ways we operate our businesses. Whether you have been working from home due to COVID-19 pandemic or have a small business set up in your home, you must be aware of the tax deductions which you can claim. Bookkeeping services in Melbourne can help you with the calculations so that you do not end up making false claims that incur penalties.
We are a family run bookkeeping business that has grown to include offices around Australia in Melbourne, Adelaide, Brisbane, Sydney and Canberra. We have been helping our clients grow since 2001. Being one of the leading Bookkeepers in Melbourne, we are offering free consultation to every new client.
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