I have just started out as a sole trader and have opened a business account for everything related to my business activities.
I would like to claim 50% business use for my mobile phone and broadband.
I have a couple of questions which I think could be considered best practice accountancy questions.
Question one:
The broadband account is in the name of my wife. Should I change it to my name?
Question two:
My mobile phone and broadband are currently paid out each month from my personal bank account. Would it be better to pay them out from my business account?
I have searched the knowledge base and forum and discovered that you can use a personal or business account and have learned how to record this in QuickFile but could not find anything about best practise. For example, what is easiest for an accountant if he perused my bookkeeping in QuickBooks or I got audited by HMRC?
I like to keep everything simple and straightforward and not over complicate things!
For items that are wholly business related, then those should always be paid from your business account if you can. For personal items for which you’re claiming an element of business use, then paying for them personally is fine. You can then claim “expenses” from your business which is the percentage you use those items for work. You can either do this as a purchase invoice to yourself, which you then pay from the business account. Or you can enter them as a journal if you’re comfortable with that, and put the credit to owner’s funds.
Bear in mind, though, with broadband, the guidance from HMRC is that you should only claim and additional expense over and above what you would be spending for personal use. So for instance, if you increased your package because you are now using it more because of the business, then you can claim the additional cost of the new package. If you haven’t changed anything, then you can’t claim 50% for business, as you were paying that for your personal use anyway.