Q&A: Which expenses can I deduct from tax?

Hello everyone! Today we kick off our first blog post with something business-related as there have been a few questions about how taxation for photographers work. One of our members, Sandy Stewart, is a chartered accountant and wrote out first guest post!

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What business expenses may I deduct from income I earn?

Well done! You have taken that “huge” step and begun to follow your dream of starting up your own photography business. “So now what?” you ask. “How do I know what expenses I can deduct from the income I am most definitely going to be earning?

Well, let’s take a look at that then shall we?

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The basic principle when it deducting expenses from income you are earning is that if you incur the expense in order to earn the income, then it can be deducted from that income as you spent the money in order to earn the income. Does that sound too simple? Well, it is but like everything in life, there are always a few conditions to this. It’s not too complicated though, so let’s look at that shall we?

The South African Receiver of Revenue (or better known as SARS) has some rules in place when the expenses are for buying things you can use for quite a long time without them being used up. These are what are known as “assets” and will include items like your camera equipment, computer, desk, chair, printer, software and the like. As a general rule these are hard to the touch. SARS does however give you a break in that if any of these items costs less than R7,000 you can deduct the full cost off your income in the tax year you buy it in.

The tax year for a person runs from 1 March to 28 (or 29) February every year.

In instances where you spend more than R7,000 on an asset, SARS has a table which allows you to deduct the cost of that item over a certain number of years, usually varying between 3 years and 5 years.

Then there are many other expenses that you will have in setting up and running your business that are allowed to be deducted against any income you earn. These include things like:

  • Insurance for your camera equipment.
  • Fuel costs for getting to shoots and meeting with potential clients.
  • Running costs for your motor vehicle.
  • Paper and ink that you use in your printer to send out quotes and invoices.
  • Accounting fees paid to someone who helps you set up your business.
  • Training costs to improve your skills.
  • A portion of your “home office” costs if you are running your business from home and have a separate area clearly set aside to run your business from.
  • Costs of hiring special equipment for a shoot.
  • Expenses paid to second shooters.
  • Amounts paid to make up artists, florists or cloth designers for using their services or products.
  • Venue hiring costs if you are paying for that.
  • Marketing costs including business cards, brochures and portfolio prints.
  • Web design costs for a small site.

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It is very important though to make sure that you keep proof of expenses being paid. You must also keep a log book of the business kilometres you travel. Try and do this as soon as possible after you pay the amount out or do the travel if you can. I don’t think there is anything worse than trying to remember what you did 2 months ago when you’ve done a million other things since then. So try get into the habit of making a note or filing the paperwork and you will save many hours after the fact.

This list is not intended to be exhaustive as there are many other factors to consider. There are also many other aspects to consider when setting up your business and making sure you are tax compliant. Feel free to drop me a note on other finance areas you may have questions on. Your feedback or comments is also most appreciated!

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If anyone has any further questions for Sandy, please feel free to contact her here:

Website: http://www.accountingandtax.expert
E-mail: sandy@accountingandtax.expert

 

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