Industry News - 11th April 2018
What are pre trade expenses?
Pre-trade expenses are those that you pay out before you start trading. It is often this pre trade period which can be the most difficult for new ventures as it takes a huge amount of effort, research and money to propel your business into the forefront of the market and gain customer attention.
Why do people need pre trade expenses?
Pre trading expenses are unavoidable when It comes to a functional business that provides its promised goods or service, this is because the trade cannot occur until you are In a position to provide the goods and services that your business is hoping to give, which means your business needs to have prepared to do so, e.g. bought some stock. You also need to provide, or offer to provide, the goods and services to your customers.
Can you claim pre trade expenses?
The pre trade expenses you incurred in the period in which your business was about to begin trading, would have been taxed. This means any expenses on paid on goods would have had a tax amount deducted.
However, this deduction can be claimed back by the business if these expenses were incurred within 7 years of you starting to trade. This means that any expenses incurred that would be tax deductible whilst actually in trade, that were gained in these 7 years can be claimed back in addition to other business expenses incurred whilst trading.
Therefore, any expenses you paid for personally to help to get your new venture off the ground, will now be a business cost, allowing you to claim back the deducted tax.
The claiming aspect of pre trade expenses is crucial to any business or company as it can often act as a cash sum which can be used to help update, expand or improve another area of the business. For example, an amount claimed back from pre trade expenses could help to fund advertising or research and development of a business, which will help to increase awareness and value of the business in the long run.
How we can help
Perrigo consultants are chartered accountants that have the tools, skills and experience you need to help you understand pre trade expenses, whether you have a limited company, partnership or you’re a sole trader, the knowledge of the Perrigo team is always at hand to guide you through the tax and expenses process.
In addition to this, Perrigo accountants also have skills in other areas of accountancy and and tax, such as contractors tax advice, tax accountants advise and tax assistant accounts, so if you’re looking to gain invaluable knowledge in other sectors of accounts within your business, don’t hesitate to view the what we do tab and explore the other options we offer.