BizSpark, Nudgemoments, Nudge Accounting, startups, tax deductions

Tax deductions and your startup

As part of our ongoing support for the Startup community, we blog (and vlog) every second month for Microsoft BizSpark as part of our #nudgemoments initiative. #nudgemoments is all about giving startups the opportunity to ask a finance question and get an answer that helps them grow their startup and make better business decisions.

The #nudgemoments StartUp Question for January was: I’m spending a lot of money on my startup. I’m not sure what I can claim for tax? Please help!

So in response to this question, Emma from Nudge Accounting broke it down into some manageable bits:

1. Running expenses

Common expenses such as advertising and marketing, office rent, travel, phone and internet along with accounting fees are all generally considered as tax deductions for your startup.

2. Equipment and other asset expenses

When you buy something for your startup such as new office furniture or a new laptop, these generally cannot be considered as a tax deduction straight away but must be spread over several years. This is designed to you match the tax deduction to the life of the asset. There are new rules from the ATO in place that mean you can claim an immediate tax deductions for items purchased below $1,000 in value.

3. Employee expenses

When you pay your staff a salary, this is considered a tax deduction along with corresponding on-costs such as superannuation and workers compensation. Just be careful if you decide to pay expenses on behalf of your employees as you may be required to pay fringe benefits tax on them.

4. Blackhole expenses

There are certain expenses that a startup can incur such as the incorporation costs of the company, legal advice prior to trading etc. These expenses cannot be claimed as a tax deduction immediately but can generally be claimed over 5 years.

To see the full article, you can read it at Microsoft BizSpark here.

You can read some of our other #nudgemoments blog posts here and here.