This article was updated on January 4th, 2019
During promotional times, it may be more economical to ‘group together’ to create a team advertisement for larger impact. However this can affect your business for tax purposes in different ways, depending on how the monies for the advertisement are processed.
Important: Situation #2 listed below increases the funds travelling through the business (turnover) and therefore may impact your VAT status.
1. You pay into an ‘advertisement fund’ which someone else administers
If you pay someone else towards an ‘advertisement fund’ (i.e. part pay each month or split the cost), you can claim the amount an expense.
You should request either a receipt from the other consultant, or details of how the invoice is split, so that you have a paper record of the expense should you be audited.
2. You receive funds from others and then purchase a team advert
Monies which you receive from other consultants is classed as income as your business is collecting this money from others. The cost of the advertisement is an expense.
You should keep copies of any monies received and ideally provide a receipt to consultants – a small duplicate receipt book may be useful – so you have evidence of where (and who) the money came from. The invoice from the advertisement can be used as evidence of your expense.