Tax season doesn’t have to be, well, taxing. As a painting business owner, there are a couple of tax benefits that you could take great advantage of. If you’re the sole owner of the business, you’re classified under the “self-employed” category.
This means you can start looking at which business expenses can potentially grant you deductions in the current tax year. Of course, which expenses are considered as “write-off” is entirely dependent on your business needs.
For your painting business, you are liable for tax deductions on business expenses such as business property, employee expenses, supplies, and travel.
Legal
You can get deductions for costs incurred by obtaining business licenses and insurance. Virtually any form of professional consultation related to your business can be written off if the appropriate proof can be produced. A quick example is hiring a lawyer to help you create an agreement for contractors. You can claim a deduction on their fees.
Advertising
Any advertisements lodged in your local phone book or painter trade publications or even general marketing costs qualify for write-offs. Other deductions allowed qualifying under educational and certification expenses. Subscriptions that are monthly or annual for trade or professional publications can also be claimed in deductions.
Materials
You are required to provide tools and materials for your business. ATO allows tax deductions for all the necessary supplies you might have purchased. Proof of purchase of materials that are used during your paint jobs throughout the year is required to track the costs of these tools and supplies.
An example of these tools for a painter are drop cloths, sponges, paint sprayers, texture terminators, work platforms, and roller covers amongst others. Make sure you have a detailed record of all receipts or else you will not be able to claim tool deductions. Keep in mind that sometimes you will have to ask for receipts because they are not always automatically given to you after purchases. Deductions are also made for fees used to rent out tools.
Travel
You can claim deductions for expenses related to travel as well as business use of your vehicle. Deductions can also be made for vehicle maintenance.
A quick example is if you use your truck to move equipment and move to and from a job, you can claim a standard mileage rate, or get deductions for oil changes, repairs, tires, as well as mileage.
If you get a job that needs you to travel outside of your city, you can get a write-off for hotel and meal expenses. You will however NOT get deductions for travel to your place of work and back home because these are considered as ‘commuting expenses’.
Home Office
It is possible to get deductions on tax if your place of business is within your home. To claim this deduction, you must use the home regularly and exclusively as your primary place of business. It should be a site to meet with clients, or as a separate structure used for your painting business.
If your home is your principal place of business, you should refer to running your business from home.
As a small business owner, you must be knowledgeable about the tax deductions that you can claim. It is helpful to outsource an accountant that can handle your tax clearance as well as tax lodging at the end of the financial year. Knowing which tax deductions, you can claim also helps you to read and understand your financial statements as well as get ready for the end of the financial year before it becomes overwhelming. If you’re not sure where to begin you can book a consultation with us to get started.
