Can I deduct the costs of tax advisors as business expenses?
March 16, 2023 | 50,00 EUR | answered by Petra Lehmann
Dear tax advisor,
my name is Franceska Evers and I have been running a small business in the fashion industry for several years. In recent years, I have noticed that my tax advisor costs are continually increasing and I am wondering if I can actually deduct them as operating expenses.
So far, I have always listed the costs as advertising expenses in my income tax return, but I am wondering if it might be more sensible to classify them as operating expenses. I operate my business as a sole proprietor and therefore do not have a clear separation between private and business expenses.
My concern is that I may have paid too much taxes so far because I have incorrectly deducted the tax advisor costs. I want to make sure that I take advantage of all possible tax savings opportunities and therefore it would be helpful to know if I can actually claim the costs as operating expenses.
Could you please help me and tell me if I can deduct the tax advisor costs as operating expenses? If not, are there other ways to make the costs tax-deductible? I would greatly appreciate your expertise and support.
Thank you in advance.
Sincerely,
Franceska Evers
Dear Ms. Evers,
Thank you for your question regarding the deductibility of tax advisor costs as business expenses. As a tax advisor, I can assist you with this and provide you with the relevant information.
In general, the costs for a tax advisor are deductible as business expenses if they are incurred in the course of earning income. This means that you can claim the costs for tax advice in connection with your business as a tax deduction. These costs therefore reduce your profit and also your tax burden.
You have previously reported the tax advisor costs as advertising expenses in your income tax return. As a sole proprietor without a clear distinction between private and business expenses, it may indeed be more beneficial to claim the costs as business expenses. This way, you can deduct the costs directly from your business profit and thus reduce your tax burden.
It is important that you can clearly and unequivocally prove that the tax advisor costs are business-related. This includes invoices from the tax advisor that explicitly show the services provided for your business. It is also advisable to have documentation of the advisory services provided for your company.
If you have actually paid too much tax in the past because you incorrectly deducted the tax advisor costs, you can make a correction. In this case, you could make a retroactive amendment to your tax returns and claim the costs as business expenses.
In addition to the direct deductibility as business expenses, there is also the option to divide the tax advisor costs as business expenses. This means that you can claim a portion of the costs as business expenses and a portion as advertising expenses, depending on the ratio in which the services were provided for your business or your private income.
In summary, it can be said that tax advisor costs are deductible as business expenses and you have the opportunity to reduce your tax burden. It is important to provide the necessary evidence for the costs and make corrections if you have paid too much tax in the past.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Petra Lehmann
