Contractor/Self employed tax write-offs

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howDoesTheMoniesWork

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I recently started a new job as a contractor (detailed in my other thread). I've been put in touch with a tax consultant who gave me a long list of questions about my expenses. I was shocked at the amount of stuff that you can write off as a business expense and bring down your tax liability (for example, buying a nicer computer or hardware)

So I am curious... What stuff do you write off? Are there crazy things that you can do, such as set up business meetings overseas and write off the trip as a business expense (heard this one online)?

PMs are welcome if you don't want to share publicly.
 
howDoesTheMoniesWork said:
I recently started a new job as a contractor (detailed in my other thread). I've been put in touch with a tax consultant who gave me a long list of questions about my expenses. I was shocked at the amount of stuff that you can write off as a business expense and bring down your tax liability (for example, buying a nicer computer or hardware)

So I am curious... What stuff do you write off? Are there crazy things that you can do, such as set up business meetings overseas and write off the trip as a business expense (heard this one online)?

PMs are welcome if you don't want to share publicly.
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In short there are two allowances you will look at.

11a this is for general deductions if it's in the production of income for your trade and not a capital expense it's deductible. Although you sound excitedif you can't prove it's for your trade don't mess with sars.


Second is section 11e this is for capital expenses like your laptop but only for trade again. Any item under 7k insta write off. Over 7k is based on the sars timing I think laptops over 7k can go over 3 years.

Now as for the business trip my wife needs to travel annually to Europe for her personal work so I'll use this as an example. The work portion is three days of the two week holiday we usually make of this. So what do we deduct.

1. Only her flight tickets. 2. Accommodation only for work portion of the trip. You can argue an extra day or two to be safe for flight delays. 3. Only her travel insurance. 4.only her visa.

You can see how you can get sars to sorta fund a portion of the trip. When I say her work it's her personal business so is not employed.


Just remember all expenses etc that relate to business expenses can and are usually scrutinized so if you cannot link it to trade don't try deduct it.


Anyway welcome to the wonderful world of getting sars to fund things.
 
In short all business related expenses are deductible.

11a general expenses like internet banking fees et.

11e capital expenses. Less than 7k in same year. Otherwises based on sars timelines.
 
RedViking said:
To say sars is funding something is a bit deceitful. You just pay less tax, which is a small percentage of the actual expense, but still very helpful.
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You are correct. But the % is based on your income. Move that to top income bracket and it quickly becomes a MASSIVE percentage.

IT can get very interesting depending how you plan it.

For example my beekeeping is also a side hustle trade.

I can forgo buying any new anything and pay full amount to sars or I can go and buy extra bee dudads related to the trade. In this instance if I buy that let's assume top tax bracket it's essentially 50% off. But this is based on income again and the progressive tax sliding scale.
 
80% of phone bill, fibre Internet, airtime, mobile data.

Office related Insurance

Office Equipment and Furniture below 7K
Office Equipment and Furniture above 7K on wear and tear over a 3 year period

Office Space Percentage of Rent, Water, Lights, Security

Office Subscriptions such as Microsoft 365 and Accounting Software etc.

Webhosting Costs.

Office Meeting Expenses aka Client at Coffee Shop

In other words, anything Busines related or percentage business related.

Be honest. Make sure your books are in order and organized. Keep proof of invoices on whatever you claim and how you calculated the deductions. Take photos of your home office areas you claim for and make sure it is an office (no guest bed in room), although they seldom ask for this.
 
RedViking said:
80% of phone bill, fibre Internet, airtime, mobile data.

Office related Insurance

Office Equipment and Furniture below 7K
Office Equipment and Furniture above 7K on wear and tear over a 3 year period

Office Space Percentage of Rent, Water, Lights, Security

Office Subscriptions such as Microsoft 365 and Accounting Software etc.

Webhosting Costs.

Office Meeting Expenses aka Client at Coffee Shop

In other words, anything Busines related or percentage business related.

Be honest. Make sure your books are in order and organized. Keep proof of invoices on whatever you claim and how you calculated the deductions. Take photos of your home office areas you claim for and make sure it is an office (no guest bed in room), although they seldom ask for this.
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Couldn't agree more on record keeping.

But the expenses extend beyond the above list to all business related expenses.

The expenses you outlined above are 100% deductible if solely used for business for example data etc.

Office space deductions within your home are messy as they impact your primary residence exclusion when selling your house one day. These I personally don't claim.
 
Snyper564 said:
You are correct. But the % is based on your income. Move that to top income bracket and it quickly becomes a MASSIVE percentage.

IT can get very interesting depending how you plan it.

For example my beekeeping is also a side hustle trade.

I can forgo buying any new anything and pay full amount to sars or I can go and buy extra bee dudads related to the trade. In this instance if I buy that let's assume top tax bracket it's essentially 50% off. But this is based on income again and the progressive tax sliding scale.
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I don't see it like that as my budget includes all my tax affairs sorted. Even though I am provisional and only need to pay my tax twice a year. I have it worked out to the cent every month. Basically I never get a refund, and I never owe SARS. Been doing it for more than a decade so I don't see it as extra money anymore. SARS take what their oily fingers demand, and I keep the rest budgetted for every rand.
 
RedViking said:
I don't see it like that as my budget includes all my tax affairs sorted. Even though I am provisional and only need to pay my tax twice a year. I have it worked out to the cent every month. Basically I never get a refund, and I never owe SARS. Been doing it for more than a decade so I don't see it as extra money anymore. SARS take what their oily fingers demand, and I keep the rest budgetted for every rand.
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I hear you but it also depends on perspective and how you may want to grow your business.

Some businesses need capital outlay so I will gladly spend in this case to reduce tax bill.. But you are correct that does means less money in pocket.
 
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Buy a flip file with 12+ sleeves, one for each month. Label the sleeves from March to Feb.

Every time I buy something, i ask myself if I am using this to run my business.

If yes, i mark it on the invoice and put the invoice in the sleeve for that month.

Any emails with invoices get filed in an expense folder.

When you're ready to file your return, pay an accountant to help you, scan all the receipts and emails into a pdf and send it to the accountant.

Organising your business as you go saves you a HUGE headache when it's time to file.
 
bromster said:
Buy a flip file with 12+ sleeves, one for each month. Label the sleeves from March to Feb.

Every time I buy something, i ask myself if I am using this to run my business.

If yes, i mark it on the invoice and put the invoice in the sleeve for that month.

Any emails with invoices get filed in an expense folder.

When you're ready to file your return, pay an accountant to help you, scan all the receipts and emails into a pdf and send it to the accountant.

Organising your business as you go saves you a HUGE headache when it's time to file.
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I don't keep physical copies of anything. Everything get scanned or photographed and uploaded to the relevant folder. In fact I do it right there at the shop.
 
Just 2 Q's regarding a personal business allowable deductions:

1) What accounting software would you recommend for small business that mostly involves consulting/IP services rendered and can you write off the costs as a deductible expense under 11a?

2) Does SARS scrutinize/reduce your deductions if you are working from 2 business locations IE: work from office and work from home-office?
 
bromster said:
Buy a flip file with 12+ sleeves, one for each month. Label the sleeves from March to Feb.

Every time I buy something, i ask myself if I am using this to run my business.

If yes, i mark it on the invoice and put the invoice in the sleeve for that month.

Any emails with invoices get filed in an expense folder.

When you're ready to file your return, pay an accountant to help you, scan all the receipts and emails into a pdf and send it to the accountant.

Organising your business as you go saves you a HUGE headache when it's time to file.
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Excellent idea. Thanks for the tips.

My accountant has already asked for the stuff like you have mentioned. Luckily, I do have the majority of it organised and ready.
 
Bonus question... what about a vehicle/transport? Can that be written off? Or is stuff like Ubering and writing off the uber cost better?
 
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