Tax planning for freelancers

This would include business notes, contracts, budgets, plans, etc.

The main purpose for maintaining such information is to create a defence against a revenue authority’s contention that the expenses incurred were not incurred for purposes of the business, i.e. they were not necessary for the generation of taxable income.

It is also important that a system of analysing and classifying the expenses is developed.

This can be as simple as using a worksheet to using a simple accounting system (e.g. quick books) to more sophisticated ways like using complete accounting packages.

Once the records are maintained, supported and classified, it would be possible for some activities which would ordinarily be considered hobbies (a round of golf perhaps) to end up being supported and legitimate business expenses.

Moreover, a number of personal expenses (e.g. travel, telephone, home internet, etc) can also be business expenses.

What is important is that you are in a position to support the expenses as well as justify why they were incurred.

kthuo@vivaafricallp.com