Is is illegal to NOT declare your business expenses? You only HAVE to declare your income right? I know you will pay less tax if you declare your expenses,but if your expenses are only a few hundred dollars per year,it's not worth declaring in my opinion because i won't have to keep records of it. income is easier to track. So state what country you live in,and is it illegal in your country NOT to declare Expenses?
To the best of my knowledge it is not unlawful to not declare your business expenses in the US. Why would any government anywhere mind your over paying your taxes? I understand your point.
I save every last receipt. I claim everything I am entitled to claim. Those little 1-2 $ ones add up to about $500 every year. I never claim any home office or computer deductions because I am too lazy to track the usage time in the prescribed manner.
It's not illegal anywhere in north america. But let's assume you have the following expenses: Hosting $10/month -> $120/year Domains $10/year (asusme for this example you have 1 domain) Advertising $100/month -> $1200/year Gas $100/month -> $1200/year Vehicle Insurance $1000/year -------------------------- $3510/year That's just very basic. I don't know about you, but having $3000+ in taxable expenses every year is extremely useful, and it really only does take 1-2 hours/month to keep it updated. And up here in Canada (not sure if this applies in the US) you collect Tax Credits for the tax you pay on those items. So if you paid $5 tax every time you buy gas, then you can use those tax credits against your expenses as well, which saves you even more money every year. So lets say you have an actual total of $7000 in expenses for the year. Lets say you have $50,000 in earnings. -Assuming tax rate is 30%, which seems to be the average for most businesses $50,000 x 30% = $15,000 in taxes due $50,000 - $7000 = $43,000 x 30% = $12,900 in taxes due It may not seem like much, but you're saving over $2,000/year for just a few hours of work. Now lets say you also pay rent and have a home office, you can write off a percentage of your rent based on the amount of your home that your office takes up. So in my case, I'm paying $1000/month in rent, and I can easily write of $250 of that for my home office. My cell phone is also used for business ($75/month). Those two bills alone total ($250 + $75) * 12 = $3900 more in annual tax savings. If you actually do the math, you can save a huge amount.
Claim every expense I can...don't understand why a person wouldn't. I do think if people did proper accounting on their sites they may be surprised to learn they're not making any money at all.
I claim my expenses. I have been lazy in the past, but have put mild effort into tracking my expenses since May this year. I live in the USA. With income tax roughly at 25% for my bracket, for every $100 in expenses I claim it is $25 that I don't have to pay or $25 in my pocket. So Yes, I claim my expenses. My expenses are about $300 per month, so thats $75 per month extra in my pocket if I track them. So if I spend an hour a week (which I probably don't spend and hour a month, but hypothetically..) then that means I am paying myself about $18.75 per hour to track my expenses. I am not willing to work for beans, but I think that $18.75 per hour is definitely decent, if not good. MAtt
I live in the UK, not sure whether it's actually illegal to not declare your expenses but I don't see why you wouldn't want to? Say your turnover is $200,000 a year and $100,000 on that is advertising... why would you want to class the advertising as profit..? It may be a pain, but it's the governments way to help you out, regardless of their method.
Our hosting companies pay $0.00 in taxes even though our revenues are large. Those expenses make it easy for our accounts and tax each year because its simple. Revenue - expenses = $0.00. Its amazing how much advertising expense you have that way. Invest and reinvest.
In my opinion, anyone who is serious about business will take the little bit of time and effort that it takes to track and claim your expenses. It really does add up, and it is just good business. Establish the habit while you are still building, that way when you hit the big time you will already have an established habit of successful bookkeeping. (Or you will at least have a deep respect for whoever you hire to do it for you.. heh)
Why not claim your business expenses? Of course every little receipt helps reduce your taxes...Of course you need to be a registered business or a sole proprietership in the USA, you report it on your schedule C
We are in INDIA, through we declear our income as well as expensive too. But here your can easily shun from the system. If you are not declaring your income no probs.... HERE