If you have a home office for your business, you should be able to claim some of the running costs. It’s important to be aware of what you can and can’t claim, and the record-keeping involved in making a claim. However the IRD also know this and have this year released a new way to claim Home Office costs even for those who hate keeping records!
How does it work?In order to claim, the space you use must be used primarily for your business. This doesn’t mean setting up at the kitchen table from time to time, it means having a dedicated space that you work from. If you are selling online and storing stock, you may also be using other spaces in your house for storage or stock maintenance. If you are making or creating products, you may be using other areas like your kitchen or workshop. If you own a work vehicle then you could also consider the garage.
To understand what percentage of your home is being used for your business, you should work out the area in square metres. Once you have the number, you can use this to calculate what you’ll claim. So, for a 150 square metre home, where 15 square metres are used for the business, 10% of the home is dedicated to the business.
You can then claim a corresponding portion of your household expenses against your business income.
This could include:
- house and contents insurance
- mortgage interest if you own the home
- rent if you are renting the home.
- Telephone and Internet.
Keeping track of expenses
Make sure you keep a record of all your expenses and retain your records for seven years. It’s important to keep your personal and business expenses separate. Consider using online accounting software so the paperwork is kept in good order. However if this kind of record keeping is not for you don’t worry. The Inland Revenue also have a rate per sqm for all costs other than rates and interest. So all you need now is to know the sqm of office and your total house and we can calculate your claim for you!
We can help you review your home office expenses to make sure these are included when you claim.
It’s a common scenario we find. Asking for a receipt or invoice that is either misplaced or lost within the never ending storage system we call the “handbag”.
Or the annoying accountant when you get to year end is asking you for hundreds of invoices and bank statements to validate your information?
With Hubdoc you can completely remove the hassle. Take pictures of invoices or simply send them to your customised email, link your suppliers to your hubdoc account and let them fetch it without you having to do anything. This also includes the downloading of your bank statements each month.
If using Xero this will then automatically post the transaction to Xero allowing you to store your bills attached to any transactions you may have or remove the requirment of entering these in manually.
These are the documents you are required to keep for 7 years and by keeping them all online you can free up the spare room for that pool table you always wanted.
Hubdoc can be as cheap as $5 a month plus GST so get in touch today about setting up an account with us.