I’m a freelance Scuba instructor i.e. I invoice the centre I work for for the hours I work plus expenses etc. I have a LTD and I’m getting the hang the accounting side of things but got a couple things that are confusing me:
part of my requirement for work is to have a Current HSE medical and I also have a DBS check done. What would you categorise these as, Professional Fee’s?
Buying new equipment e.g. a new drysuit (they are around £2k) . This would hopefully last 10 or so years. Would it need to be booked as capital expense? Also obviously would be used for work most of the time but i would be using it personally sometimes do this effect how it goes into the accounts.
Also what do categorise Companies house fee’s e.g. confirmation statement?
Hi,
You can easily add your own nominals, for example you can call it DBS checks and company house fees, so you know exactly for what it is. Have a look here:
If you use your dry-suit also privately then you can only claim part of it depending on how often you use it for work and private. For more detailed information especially how to record it in your books it is probably best to speak to your accountant.
ok cheers - i was treating the HSE and DBS as subscriptions as they are similar to the membership of professional society they are required for work. But I guess I could seperate it out.
The drysuit i’ll see how much personal allowance i have left at the end of the year might just be easier to pay for it myself.
The important point for you to understand on any expenses is YOU can categorise them under any headings YOU want. If you want an account called licences that might include your DBS check and retesting (if scuba instructors have to be retested) and a permit to teach in Spain (if thats a thing), you can do that… If you want to have it broken out onto separate line items in your accounts, you can do that too. My Office Expenses account is where i record everything related to my admin, but for me its a small amount and not worth the effort of having separate lines for stationery, copying, printer cartridges etc… A different business might want it split out to understand where its money was going
On the wet suit… Its true that if you spend £2000 on a wet suit which is used 50% of the time for business then you cant claim the full cost to the business. In principle, you want to claim for the cost of the item over its life, so in very simple terms if you are going to claim £1000 and it lasts 10 years you want to charge you ltd £100/year against its profit so that after 10 years the business has paid back the £1000 and the suit is worthless due to its age.
In accounts it is more complicated as a certain % is written off each year (depreciated) to take account of the fact that the value does not go down by £100/year, but after 1 year it might be worth £300 less (who wants a 2nd hand suit) then it goes down less in subsequent years.
You definitely want to talk to an accountant about the drysuit. Who actually owns it - you as an individual or your ltd company?
If it is owned by the company then there are tax and NI implications if the company permits you to use it for personal use, based on a proportion of the asset’s value scaled by the proportion of the year when the asset is available for personal use (not the proportion of the year when you actually use it privately, rather the entire year except for the days that the asset is used only for company business).
If you own it yourself then it wouldn’t go on the company books at all but you may be able to charge the company “rent” for the days when it is used for business. But exactly how that works, how much you could reasonably charge, etc. I’ve no idea, definitely take professional advice. And of course going down this route the rental payments from the company would count as self-employed turnover for you which you would need to account for on your personal tax return…
Thanks guys I appreciate i to check things with an accountant it was just trying to get a handle on how to get things started etc etc. As I essentially a one man show to want get as much done as I can myself.
I think I was trying to too clever re dry suit - I think I’ll just buy personally - other options like renting to my myself or becoming a asset are far complex for the simple set up I am.
They are some good tips above - which I’ll implement an once have completed my book keeping for the year check things through with an accountant.