It’s almost the end of the financial year in New Zealand and small business owners are preparing their paperwork to make the most of tax deductions. While many entrepreneurs are familiar with common business expenses such as rent, utilities and office supplies, there are several lesser-known items that can also be claimed as deductions. Including all deductions that are available to you will significantly reduce your taxable income and maximize your savings. To help you make the most of tax time, we spoke to a popular New Zealand accountant for some expert tips. Here are six things you might not have realised you can claim as an expense for your small business:

1. Home Office Expenses: If you operate your business from home, you can claim a portion of your household expenses as business expenses. This includes a proportion of your rent or mortgage interest, utilities, internet bills and even depreciation on furniture and equipment used for business purposes. To claim this deduction, you'll need to calculate the percentage of your home that is used for business and apply it to your total household expenses.

2. Interest On Your Business Loan: If you obtained a loan and the funds are used for business purposes, you can claim the interest on that loan. It doesn’t matter what security was used; the purpose/use matters. So even if your house has been used as collateral, you can claim the business loan as a taxable expense. You can also claim expenses involved in obtaining the loan. That makes March a great time to take out a business loan if you need one; so that you can reap the tax offset benefits immediately. If you need a business loan, you can apply for one now with Bizcap; there’s minimal paperwork required and takes less than 5 minutes.

‍Hot Tip: If you have a mortgage and a business loan, it may be worth paying off your home mortgage first. This is because your mortgage is non-deductible so can cost you a lot more than the interest paid. In other words, although your business loan may have a higher interest rate you will save tax, which might mean you keep more money in your pocket at the end of the year by paying off your house mortgage first then claiming back more interest charges on your business loan.

3. Professional Development: Investing in your skills and knowledge should benefit your business and fortunately, the costs associated with professional development are tax-deductible. This includes most or all expenses related to attending seminars, workshops, conferences and courses relevant to your industry. Additionally, subscriptions to professional journals or memberships in industry associations can also be claimed as business expenses.

4. Travel Expenses: Although most people understand they can claim all incidentals for work-related travel costs, some overlook the fact that this includes both domestic and international work-related travel expenses.

5. Bad Debts: Unfortunately, not all invoices are paid on time, and some may never be paid at all. The good news is that you can claim a deduction for bad debts, provided you have taken reasonable steps to recover the money owed. This might include sending reminders, issuing formal demand letters or pursuing legal action. Once you've determined that a debt is genuinely uncollectible, you can write it off as a business expense.

‍Hot Tip: If your business struggles with seasonal fluctuations, read our article about Seven Tips for Navigating Seasonal Fluctuations in Business for ideas to help you manage.

6. Loss of Income Insurance Premium: Whether you are self-employed or on a wage, if you have loss of income insurance and end up out of work due to an event, you can claim back the premium on your loss-of-income insurance.

Hot Tip: To maximise your claimable expenses, it is crucial to keep meticulous records and seek advice from a tax professional to ensure compliance with New Zealand tax laws and regulations.

As you prepare for the end of the financial year, it's worth taking advantage of all available deductions to minimise your tax liability and keep more of your hard-earned funds.  While many expenses may not seem significant in isolation, they can add up to substantial savings. Remember what they say: if you count the cents, the dollars will come.

Please note: This article is not tax advice. If you need assistance with your taxes, seek help from a finance professional. For more information about claiming expenses and reducing your tax payable, visit the business.govt.nz website here.

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