In contrast, if you are a sole proprietor – that is, your business is not a separate legal entity from you – then you must report the income generated from trading on your personal income tax return. In South Africa, you can claim legitimate business expenses as tax deductions, regardless of whether you’re a sole proprietor or a company. Sole Proprietor Vs Company: Can Both Claim Business Expenses? Tax deductions can be carried forward for losses incurred in previous years in the same business. A tax-deductible business expense could be claimed if, for instance, you purchased equipment three months before opening your business. These expenses are business-related expenses that you incurred before you started your business. If you want to claim the expenses, you must show SARS that they were incurred in the course of business. Expenses include drinks, meals, live entertainment, venue rental, and the like. Entertainment ExpensesĪll expenses incurred while entertaining clients are tax-deductible. You can deduct the cost of education that you invest in yourself or your employees to operate your business as a business expense. Your business incurs capital expenses when buying major assets or services that will be used for a long time. It is a good idea to check with your tax advisor how much deduction you can take for your home office expenses.
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