Accounting is a tool for two major purposes
- Measuring performance and keeping track of assets and debt.
- Keeping track of taxable profit and compliance with tax regulation.
Tax compliance is a big field of expertise with a lot of details. However the basic taxation rules are
- Expenses that has to be made to maintain or generate revenue are deductable, the rest aren’t. If you have no revenue, you’ll have to show that the expenses are necessary to eventually create revenue.
- Company assets or expenses that are beneficial to you as a private person are fringes and should be taxed as such or not be included in the business at all.
Some common examples of breaking the above rules are
- Expenses for food, drink, living, travel to work and other things necessary for living are considered private expenses. Everyone has to eat and go to work, not just company owners. Business travel has exceptions to this general rule.
- Office furniture bought for your personal home is considered private expenses since your use of the furniture is not restricted to work only (you have access to them when not working). In general, an office at home it not considered deductible. It can be under certain circumstances, but that’s well regulated.
- Living expenses. You can’t let your company pay for your personal living (rent, house, utility bills etc). If your company owns your house, you have to pay rent to your company at market level.
- Costs to aquire a passport for business travel. Personal expense since the passport can also be used for private travel.
- Internet costs at home (can be used for private purposes)
If you’re unsure if an expense is deductible, it probably can’t be deducted. If you think you can argue with Skatteverket on why you have to break a specific or general deduction rule, re-think. They have teams of people dedicated to find non-allowed deductions and question those. If you get caught in such investigation, they’ll have a lot of time to crush your arguments and fine you while you just want to go back to running your business. It’s not worth it.
Focus on creating revenue not what you can deduct.