HOW DO YOU ACCOUNT FOR BUSINESS EXPENSES when YOU OPERATE YOUR BUSINESS at HOME?

Option 1:

  • Calculate the dimensions of your home office or working space as a percentage of your home.
  • This fraction will be used to calculate the exact value of your expense as home which is used by your business:
  • Telephone
  • Electricity
  • Internet
  • Water Rates

For example:

Your workspace is 10 feet by 12 feet = 120sq ft; your house’s living space is 2,500 sq ft.  Your work space is 4.8% of your entire floor space.

Hence, you will do as follows:

  •         T&TEC bill for February to March $530.50.
  •         Your business’ usage will be (4.8% * $530.50) = $25.47

The same will be done for each expense above.

Option 2:

  •         Apply 25% of the listed expenses as the operating expenses of the business.

For example:

  •         T&TEC bill for February to March $530.50.
  •         Your business’ usage is calculated as ($530.50*.25) = $132.63

WHAT IS a BUSINESS EXPENSE?

A business expense must be both ordinary and necessary for the effect running of any business.  Ordinary expenses will be common and acceptable expense in your field of business.

For example:

An ordinary expense for a catering business will be flour to bake cakes or cookies.  Flour will not be an ordinary expense for a photography business but CDs or photobooks will be.

Business Expenses may include, but are not limited to, the under mentioned:

  1. Business Promotions and Advertisements
  2. Bank charges and interest
  3. Charitable Donations
  4. Depreciation
  5. Directors’ Remuneration
  6. Entertainment (75% of expenses, incurred)
  7. General Expenses
  8. Insurances – public liability, workmen’s compensation, health insurance and home insurance (if home based business)
  9. Motor Vehicle Expenses- Gas, repairs and insurance
  10. Penalties and interest
  11. Professional Fees – Accounting, auditing and legal
  12. Repairs & Maintenance Building and computers
  13. Office Expenses: Stationery, printing, staff groceries, etc.
  14. Salaries: Gross salary, bonuses, commission, 2/3 employers’ contribution (budget 13 months of salary per employee to cover relief staff for vacations and sick leave should the need arise).
  15. Utilities: electricity, internet, water rates, cellular phone, cable (if you have a restaurant or a waiting room for your guest)