"What expenses can I claim?"

When you run a business from home, that's something you definitely need to know.

Can you claim tax relief on part of your mortgage, or rent? What about the running costs? Do you get any tax relief at all?

The answer is yes, you do - and my friend and fellow accountant Alan Young has explained it beautifully on his blog here.

Show Me The Money - excellent advice from KashFlow

Duane Jackson of KashFlow has just written a superb piece on his blog with some very useful tips to help you make sure your customers pay you on time.

I particularly like the last point:

Customers paying late are a real pain. So don’t forget that you are a customer too. If you expect your customers to pay you promptly, then make sure you pay your suppliers promptly.

I've read business writing by people who try and make their customers pay them yesterday, then don't pay their suppliers right up until the last minute, to keep the cash as long as possible. I don't like that.

I've dealt with one estate agent who used always to knock a percentage off his suppliers' bills when he paid them and argue it later if and when they noticed. Ouch ouch ouch.

Put it this way - having seen what he was like as a customer to his suppliers, I'd never buy a house through him. What goes around comes around.

The legal side of a home-based business

Picture the scene.

You've been made redundant from your job as a result of the credit crunch and have decided to turn your hobby - be that jewellery making, teaching French, or basket weaving - into a home-based business.

Great decision, because it means you're making money doing something you love. (I'm so much happier since I set up my home-based business. My husband's noticed that too.)

But when you're in business, you've got to think about so much more than if you were doing what you do, as a job.

If you were weaving baskets for an employer, all you have to do is - weave baskets. You don't have to find customers, pay bills, keep your books.

And you don't have to worry about whether your contracts with your customers and suppliers would stand up in a court of law.

If you're running a business weaving baskets, you have to do all of that.

So often, micro businesses don't put written contracts in place. Remember - a verbal contract's not worth the paper it's written on.

And then if your customer doesn't keep to your payment terms, could you sue them?

I would suggest thinking about that and talking to a lawyer.

But do remember that not all lawyers, like accountants, specialise in micro businesses. Many of them would charge you a huge amount and that's just what you don't need.

Try a service like Lime One (hat tip to Enterprise Nation for pointing me at them) that will give you "a template and minimal support" if that's what you want.

Thanks to Stefan for the tip to write this.

How complicated can a 4-page form be?

I visited another firm of accountants yesterday and during the meeting, we got to talking about tax returns. Sad isn't it.

We can remember the time when the shortest tax return was 10 pages long.

Now the shortest tax returns are 4 pages long.

Improvement?

Hang on a sec.

The guidance notes got longer when the return got shorter.

The 4-page return contains exactly the same information as the 10-page one. It's just that you have to add bits together to get the figures to go in the boxes on the 4-page form.

This is where it starts getting complicated. What figures should go in which box?...

I'm one of those people who thinks the UK's tax system is in serious need of simplification. Surely a form that has to be filled in every year shouldn't need a thick wad of guidance notes to fill it in.

And it's really scary that nobody in the winning team on University Challenge a couple of years ago could work out a tax credit claim correctly. If those bright sparks can't do it, what hope do the rest of us have? And that includes the staff at HM Revenue.

But until Mr Darling and co do make the form simpler, remember there are lots of friendly accountants out there who have done so many tax returns that we talk about them over coffee - and we're here to help YOU.

What perks for no commute?

My friend and fellow accountant Shaun McGuinness of Tax Sorted writes about some of the perks that employees can receive from their employers without also receiving a whacking great tax bill.

One of them is a tax-free bicycle to ride to work and a tax-free breakfast when the cyclist arrives at work. (And hopefully the employer would also provide a changing room and shower.)

And cyclists who provide their own bike get a 20p/mile allowance, compared to 40p/mile for the first 10,000 miles driven in your own car and 25p/mile thereafter. That sounds generous to me.

Shaun says:

We have thus far waited in vain for the introduction of joggers’ breakfasts and walkers’ breakfasts!

I agree - there's no mileage rate at all for walking to work and no provision for a tax-free breakfast for those who use shanks's pony to get to work.

And what about those of us whose commute is a walk into the dining room / spare room / down the garden to the shed - home business owners and homeworking employees? How about a tax-free breakfast for us Mr Darling?!

What do you want from your accountant?

The clients who've so far come on board with me have wanted the same things from their accountant.

Someone who'll help them keep good records so that they know how their business is doing and keep the Revenue happy.

Someone who'll make sure they fill in the right forms and pay the right amount of tax at the right time.

Someone who'll give them advice on how to save tax, like buying a new piece of equipment just before the year end instead of just after it, so you get the tax relief a year earlier.

Someone who won't talk endless accountantese, or drown them in generic information sheets and newsletters.

And someone who charges reasonable fees for a small home-based business.

That's what I'm aiming to offer to my clients.

But I'd be interested to hear if there's anything else that home-based businesses would like from their accountants.

What makes you choose your accountant? Why did you pick that one? What would you like them to do differently?

Please tell me using the comments box.

Business equipment on a shoestring

Emma Jones's book Spare Room Start Up, one of the books on my recommended list, gives a breakdown of how you can start your small business for under £500 - and that includes the price of a bottle of bubbly to celebrate!

The most expensive item on her list is a £335.99 laptop.

But you really don't need to spend that much on a computer.

It's not unknown for big organisations to off-load their old computer equipment in return for a small donation to charity. £25 to the Air Ambulance, and hey presto, I have a desktop. OK it's a few years old, but that doesn't worry me. In fact, I'm glad it's an older model, because it's running XP, not Vista.

And sometimes people even post computer equipment on Freecycle, and that means you could get it for nothing.

You don't need a top-of-the-range Apple Mac, or even a mid-range laptop, to be successful in home business. Spend your money where it will really make a difference - on a good website, or professional business stationery.