Income, expenses and profit

You are taxed on profit, not turnover. Every legitimate expense you fail to record is money you hand over unnecessarily.

What generally counts

Common allowable expenses across most systems: materials and stock, subcontractors, business travel and mileage, professional insurance, accountancy and legal fees, software and subscriptions, business phone and internet, marketing, bank charges on the business account, training that maintains existing skills, and a proportion of home costs if you work from home.

Larger equipment - vehicles, machinery, computers - is often treated separately through capital allowances rather than deducted in full immediately. Rules vary by country.

What generally does not

Personal clothing (even if you only wear it for work), ordinary commuting to a regular workplace, client entertaining in many systems, fines and penalties, and anything with a personal element that has not been apportioned. Where a cost is mixed - a phone, a car, a spare room - claim only the business share, using a method you can explain.

Records are the whole job

Keep a digital copy of every receipt and invoice, categorise as you go, and reconcile monthly against the business bank account. Most countries require records to be kept for several years and are increasingly moving to digital filing. Photograph receipts the day you get them - thermal paper fades, and reconstructing a year in April is where deductions get lost.

Two habits worth more than any tip

1. Never mix personal and business spending in the same account. Untangling it is the single largest cost most small businesses pay their accountant for. 2. Review your expense list once a year. Most self-employed people claim the same handful of costs and forget several categories they are entitled to.

Rules differ by country - use this as a checklist to discuss with an accountant, not as a definitive list.