The most common deductions for a small business owner

As a small business owner, you have the opportunity to deduct certain expenses incurred from doing the work in taxation, which reduces the amount of taxable income and thus the amount of taxes to be paid.

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Palkkaguru provides a comprehensive list of the most common deductible expenses that you can declare as a small business owner.

Although Palkkaguru handles your payroll, it is important that you identify and report these the most common deductions, i.e. expenses.

The list of the most common deductible expenses

1. Purchases and materials related to work

Tools and equipment: All the tools, machines, software and equipment you need for your work. For example, computer, camera, software licenses, special tools. If the value of the purchase is above a certain limit (usually approx. 1200 euros), it can be deducted as annual depreciation for several years.
Supplies and materials: Consumables, raw materials and small materials directly related to work. For example, papers, printing inks, art materials, miniatures.
Professional literature and publications: Professional journals, books, e-books and databases that are necessary to maintain or develop your professional skills.

2. Education and skills development

Vocational education and courses: If the training is related to your current or future work as a small entrepreneur and is necessary to maintain or develop your skills. For example, software courses, license training, industry seminars or webinars.
Licenses and membership fees: License fees required for professional activity and mandatory membership fees to professional associations.

3. Travel expenses

Trips to customers or to the place of work:
- Kilometer allowances: Business trips made in your own car according to the maximum tax-free amount confirmed annually by the Tax Administration. For this you need a driving logbook or a similar statement.
- Public transport: Public transport tickets (train, bus, plane, taxi) for work trips according to actual expenses.
- Accommodation costs: Hotel or other accommodation expenses related to the business trip.
Per diem: If the business trip requires an overnight stay or lasts long enough (more than 10 or 6 hours in the home country), you can receive a tax-free daily allowance for meals and other living expenses. The amount of daily allowance depends on the duration of the trip and the destination.

What should be paid particular attention to

4. Work-related expenses

Workspace (workroom deduction): If you work from home, you can reduce the office deduction. Its amount is either formulaic (e.g. 920 euros/year for a full-time telecommuter) or according to actual expenses, if you can show the exact parts (e.g. rent, electricity, heating).
Telephone and internet costs: If you use your own phone or broadband connection to do work, you can deduct the portion corresponding to work use. Usually, the reduction is a formulaic percentage, unless the actual work use can be accurately demonstrated.
Representation and marketing costs: Reasonable and documented representation expenses (customer accommodation, gifts) can be partially deducted. Expenses directly related to marketing, such as advertisements or website maintenance expenses, are also deductible.

5. Bank and insurance service costs

Bank service fees: Maintenance fees for a work-related bank account or payment service.
Insurance premiums: Voluntary insurance related to work, such as liability insurance or voluntary pension insurance (YEL contributions).

Detailed documentation: This is the A and O of everything! Keep all receipts, invoices and vouchers carefully and systematically. Mark the purpose of the purchase on the receipts. You cannot make deductions without proper supporting documents.
Connection between work and expenses: Expenses must always be involved immediately and unambiguously for doing your job and generating income. Personal expenses are not deductible.
Instructions from the tax administration: Deduction rights and amounts are based on the instructions of the Tax Administration, which may change annually. It is important to stay up to date or trust a service like Palkkaguru that knows the regulations.
Palkkaguru instructions: Check Palkkaguru's instructions on how and when you should submit expense receipts and statements so that they can be taken into account in your taxes effectively. Often the expenses must be declared and the receipts submitted to the service, which then processes them correctly with your tax return.

By taking advantage of these deductions, you can reduce your taxable income and improve your own financial position as a small business owner. Remember that careful receipt management always pays off!

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