Hi,
I'm an Irish contractor working in Ireland, who has set up his own company and all that. I am confused about the issue of expenses. It seems to me that expenses are reimbursed and that no expenses actually cost anything. I am sure i'm missing something here...
If I buy a 30 euro book for my company say, then I spend 30 euro. Now this is a business expense, and therefore comes off of my income. My income minus this 30 euro is then taxed and my net profit is attained. But then according to my accountant's example this 30 euro is RE-ADDED to my net profit. Isn't this mad?? It seems to me like the book is essentially free coz you lose 30 euro buying it, then the 30 euro comes off the income to give you a lower value to be taxed on, and then its re-added gross at the end, in effect cancelling your purchase of it while still lowering your tax. What am i missing!
This has to be an incorrect interpretation. Can anyone help me?
Thanks
I'm an Irish contractor working in Ireland, who has set up his own company and all that. I am confused about the issue of expenses. It seems to me that expenses are reimbursed and that no expenses actually cost anything. I am sure i'm missing something here...
If I buy a 30 euro book for my company say, then I spend 30 euro. Now this is a business expense, and therefore comes off of my income. My income minus this 30 euro is then taxed and my net profit is attained. But then according to my accountant's example this 30 euro is RE-ADDED to my net profit. Isn't this mad?? It seems to me like the book is essentially free coz you lose 30 euro buying it, then the 30 euro comes off the income to give you a lower value to be taxed on, and then its re-added gross at the end, in effect cancelling your purchase of it while still lowering your tax. What am i missing!
This has to be an incorrect interpretation. Can anyone help me?
Thanks