There are many questions circulating about deducting business expenses. Many freelancers and entrepreneurs regularly puzzle over what they can compare with their business income and how. This blog post gives an overview.
Business expenses are loud Section 4 Paragraph 4 of the Income Tax Act about operational expenses. They reduce a company’s profits and therefore have an impact on the amount of taxes to be paid. A distinction is made between unrestrictedly deductible business expenses and non-deductible or only limited deductible business expenses. In addition, there are anticipated and subsequent operating expenses. In principle, they can be claimed in the year in which they are paid. Examples are listed below:
Anticipated operating expenses
They arise before the start of self-employment or freelance work. These are, for example:
- Planning and financing costs
- Traveling expenses
- Government fees
- advertising costs
Unlimited deductible business expenses
These can be claimed in full and include, among other things:
- Depreciation, for example for fixed assets
- Personnel costs such as wages and salaries
- Rental costs
- contributions to professional associations
- Insurance
- Corporate taxes
- Specialist books and specialist magazines
- Repair services
- Consulting costs, for example for lawyers and tax advisors
- Bank fees
- Training costs
- Operating telecommunications expenses
- Costs for company-related trips
- Marketing costs
- Sales tax paid to the tax office
Limited deductible business expenses
As far as this expenditure is concerned, only a certain part may be taken into account. This applies, for example:
- Expenses for gifts: The limit is a maximum of 35 euros per person per calendar year.
- Entertainment expenses: Only 70 percent of them are considered deductible.
- Additional additional expenses for meals: The costs may only be calculated using the flat rates for business trips.
- Fines, administrative fines, warning fines, fines
Subsequent operating expenses
Even if a company no longer exists, expenses may arise. Then there is talk of subsequent operating expenses, including for:
- Debt interest
- Tax Consultants
Ensure recordkeeping requirements
Regardless of what business expenses are involved, the recording obligation must be observed in order to be tax deductible. Excluded from this are certain professional groups who want to apply the flat-rate business expense allowance that applies to them. However, since it can be cheaper to calculate the actual costs, you should also collect all receipts. This means that the documents must be archived in accordance with the principles for the proper management and storage of books, records and documents in electronic form and for data access (GoBD). In addition, it is important that entrepreneurs can provide proof of payments.
GetMyInvoices helps to implement these requirements easily and intuitively. Our invoice management software automatically collects invoices from more than 10,000 online portals, email inboxes and other sources. Receipts can be easily added using the scanning app. All documents are stored in a secure cloud where they are Organize in accordance with GoBD let. This also includes AI-supported assignment of receipts to financial transactions. Try it!
