These are all the ongoing expenses associated with running your business that you can deduct from your 'gross profit' figure on your profit and loss account to calculate a figure of 'profit before taxation'.
Legitimate business expenses for accounting purposes are:
- employee costs
- premises costs
- general administration
- motor expenses
- bad debts
- legal/professional costs
- other finance charges
- depreciation or loss - profit - on sales of equipment
- any other expenses
Note that some elements of these expenses are not allowed for tax purposes and are added back before your taxable profit is calculated.
Apportioning expenses - self-employment and partnerships
Where expenses apply partly to business and partly to non-business or personal use, you need to exclude any expenditure that relates to non-business use. For example, if you use your car for both business and private purposes, you normally work out the allowable business and non-allowable private proportions based on the mileage covered for each.
When filing invoices, remember to note any apportionment on them.