The Majority of business owners are focused on getting jobs completed and providing a high standard service to their customers. This focus can leave business owners open to higher tax liabilities and expenses as they grow their business, they can loose track of costs and allowances that could result in a huge boost in profits at the end of the tax year.
At Taxpro we pride ourselves on the advice we give our clients which results in thousands of euros saved in expenses and far greater potential for retaining a profit margin. That is why we created this list of tips for business owners looking to reduce costs. Maybe your business is already carrying out some of the practices listed below but we hope there’s something for everyone here to help them save money.
Travel and Subsistence
Travel and subsistence is commonly overlooked by a surprising amount of businesses. Maybe you were not aware that this allowance was available or you are not sure how beneficial it can be, we will take a closer look to see just how valuable it can be to a business owner.
Allowances vary depending on your time spent out of the office.
5-10 hours out of the office has a €14 per day allowance
10 hours or more has a €33.61 per day allowance
What does this mean
It might sound wonderful but it can get a little confusing when we try to apply the travel and subsistence allowances to your business model so lets take a look at a real world example of how the allowance can have an effect on expenses to a sole trader, partnership or Limited company.
A Business Consultant named Bob, working a typical day from 8am until 5pm on varying meetings throughout a five day work week. All clients are at least 8km from Bobs home office. He works a typical 48 week year which allows for four weeks of holidays. As Bob works a 9 hour day he falls into the lower bracket of €14 per day. Had he worked for ten hours or more per day he would be eligible for a €33.61 allowance.
€14 x 5 = €70
When we multiply our weekly allowance by the number of weeks worked in the year we see the slightly more alarming figure of €3,360 in yearly allowance that Bob could claim had he been informed on Travel and Subsistence.
€70 x 48 weeks = €3,360 per year
When we take into consideration the huge number of businesses that have not claimed any travel and subsistence it really highlights how much you could be potentially missing out on. Lets say Bob has been trading for the past seven years without claiming his allowances we see a truly shocking figure of €23,520.
€3,360 x 7 years = €23,520
How much money could you save?
If Bobs tax bill was €7,000 for 2016 he can deduct 40% of his travel and subsistence resulting in a saving of €1,344 in his tax liability.
€3,360 x 40% = €1,344
Bobs tax bill was €7,000 that he would have to pay to revenue, however after deducting his allowances he has a revised bill of €5,656
€7,000 – €1,334 = €5,656
For more informative tips on your business accounts or to book a consultation with our team you can visit our contact us page here. or visit our Facebook page at http://www.facebook.com/taxpro.ie for helpful tips on how you can save money by calculating your allowances and expenses correctly