As a freelance social media manager, you need many things to professionally run your business and your client's social platforms. And when you first start your business, that can seem expensive.
We recently noticed the same question popping up in our community: ‘Can I claim XYZ as expenses?' and more often than not, the answer was a big fat yes.
If you are self-employed and spending any money on your business, then read on.
We asked finance expert Laura Moss to share her advice on business expenses.
Here's what she said:
1. Keep things simple.
2. Don't get caught up worrying about the categories your expenses fall under until you reach approx £83K HMRC only need to know a total expenses figure, not the categories.
3. You don't need software, and it can, in fact, make it all too confusing, especially when using software that's designed for Limited Companies. A simple spreadsheet can work just as well.
4. If you use it wholly and exclusively for business, you can claim it as a business expense. If not, you may wish to claim only a percentage of the cost.
Why should you be claiming business expenses?
If you are self-employed, your tax bill will be calculated based on your profit.
Profit is your annual income minus any business expenses.
Even if you don't think you'll hit the tax allowance threshold, it is important to keep a track of your business expenses so you know what you are spending to work with a client, and your rates can reflect that.
We have lots of advice and tips about managing your business finances from finance expert Laura Moss within The Social Media Managers Toolkit.
5 Things we claim as expenses for our freelance business
#1 Scheduling tools
If you aren't using a scheduling tool for your clients because of the price, then a) you should be charging it back to them, and b) you are probably unaware you can put it against your expenses.
A scheduling tool will undoubtedly make your life easier, and as it's a business expense, you can put it in the expenses column on your financial reporting sheet (you have one of those, right?)
We are big fans of Agorapulse, and the tools they offer have not only saved us time in scheduling but also with reporting. We think it's worth every penny.
#2 Phone bill
Using your phone for business? Then you should be putting your bills down as expenses.
This applies whether you are using it for one client or all your clients to engage or post content, reply to emails, talk to clients, etc. If your primary use is business, you can claim 100% of the costs; however, if you use it for personal as well, you can still claim a percentage.
This means if you want a new phone… guess what… a percentage of that could be a business expense too!
We don't have fancy Macs just because we love Apple (although we do!)
We know that having the best laptop/desktop available will make our jobs quicker and easier, and if it comes with a price tag, then that's fine because it is a business expense, and we can claim it as such.
Meaning it comes off our profit and brings our tax bill down.
Got a thing for planners and pretty pens? They can be claimed as an expense if you need them for your business! This also includes postage, printer cartridges, post-it notes etc. All those things that you use on a daily business without even thinking about it.
#5 Memberships and ongoing professional development.
If you are paying for any training to help you in your business, you can probably claim it as a business expense.
We do everything we can to stay on top of our game, so for us, this includes courses, workshops, online guides, and memberships.
We invest heavily in training to ensure we offer our clients the best service and bring our tax bill down!
The membership must be related to your business, so, for example, The Inner Hub would be a tax expense as the tools and training we give you directly help you to grow your business as a social media pro.
You cannot claim for training courses that help you:
- start a new business.
- expand into new business areas, including anything related to your current business.
Disclaimer: We are not accountants and strongly suggest you take advice from an accountant regarding your tax return so you know what you can and can't claim as a business expense.