SnapBooksThe test in four countries
| Country | The test |
|---|---|
| United States | Ordinary and necessary: common in your line of business, helpful for it, and reasonable in amount. Personal, living and family costs aren’t deductible. (IRS) |
| United Kingdom | Wholly and exclusively for the business: costs paid only to earn business profit. Personal costs, and capital items that last several years, aren’t allowable expenses. (GOV.UK) |
| Canada | A reasonable current expense incurred to earn income. Capital purchases are claimed differently (as capital cost allowance), and personal costs aren’t deductible. (CRA) |
| Australia | Three golden rules: the expense must be for your business, not private use; for mixed use you claim only the business part; and you must have records to prove it. (ATO) |
Expenses most small businesses claim
- Office supplies, stationery and postage
- Software, apps and subscriptions you use for the business
- Phone and internet (the business share)
- Vehicle costs, or a per-mile or per-kilometre rate where your country allows it (see the official rates)
- Business travel: transport and accommodation
- Accountant, legal and other professional fees
- Advertising and marketing
- Business insurance, bank charges and payment fees
- Training that keeps your current skills up to date
Items that last several years, such as a laptop, a van or machinery, are often claimed over time (depreciation or capital allowances) rather than all at once. The rules vary by country, so check yours.
Usually not deductible
- Personal and family costs: groceries, everyday clothing, personal gym memberships.
- Commuting between your home and your regular workplace.
- Fines and penalties.
- Entertainment: client entertaining isn’t allowable in the UK, entertainment generally isn’t deductible in the US, and in the US and Canada many business meals are limited to 50%.
- The private share of mixed-use costs: if you use your car or phone partly for personal reasons, only the business part counts.
What good proof looks like
- The receipt or invoice: who you paid, what for, when, how much and the tax.
- A short note on how it relates to your business.
- For mixed-use costs, how you worked out the business share.
- For car use, a mileage log or the receipts behind your actual costs.
Keep it for as long as your tax authority requires: see the rules by country. SnapBooks keeps the receipt image, the details and your note together in one expense.
Frequently asked questions
Can I claim something I bought partly for personal use?
Usually only the business share. If you use your phone 60% for work, for example, you’d generally claim 60% of the cost, and you should keep a note of how you worked that out.
Is a laptop a business expense?
If you use it for your business, yes. Because it lasts several years, many countries have you claim it through depreciation or capital allowances, and some allow the full cost in the first year. Only the business share counts.
Do I need a receipt for every expense?
Tax authorities expect records that prove each claim, and a receipt or invoice is the standard proof. The ATO puts it simply: you must have records to prove it.
Are business meals deductible?
It depends on the country. In the US and Canada many business meals are limited to 50%. In the UK, meals with clients count as entertaining and aren’t allowable, but some meals while travelling for work can be.