Are Interior Design Services Tax Deductible for My Business?
For businesses in New Zealand, investing in interior design services can enhance your workspace, improve employee productivity, and create a more welcoming environment for clients. But are interior design services tax deductible for your business?
In this blog post, we’ll explore the tax implications of hiring interior designers, what expenses are deductible, and how to maximise your tax benefits.
Read on to learn how you can make the most of your investment in interior design.
Understanding Tax Deductibility of Interior Design Services
When it comes to tax deductions, the New Zealand Inland Revenue Department (IRD) has specific guidelines on what business expenses are deductible. Understanding these rules is crucial for making informed decisions about your interior design investment.
1. Capital vs. Revenue Expenses
One of the first things to understand is the difference between capital and revenue expenses. Capital expenses are those that provide a benefit over a long period, such as purchasing property or equipment. Revenue expenses, on the other hand, are incurred in the day-to-day running of your business, such as rent, utilities, and office supplies.
Interior design services can fall into either category, depending on the nature of the work. For example, a major renovation or fit-out may be considered a capital expense, while regular maintenance or minor updates could be classified as revenue expenses. Generally, capital expenses are not immediately deductible but can be depreciated over time.
2. Deductible Expenses
Certain interior design-related expenses may be deductible as business expenses. These can include:
Design Consultation Fees: Fees paid to interior designers for consultation and planning.
Design Implementation Costs: Costs associated with executing the design, such as hiring contractors or purchasing materials.
Maintenance and Repairs: Costs for maintaining and repairing your office space.
It’s important to keep detailed records of all expenses related to interior design projects to ensure you can substantiate your deductions if required.
3. Depreciation
For capital expenses, you can claim depreciation over the useful life of the asset. This means that while you may not be able to deduct the entire cost of a renovation or fit-out in the year it was incurred, you can spread the deduction over several years. The IRD provides guidelines on the depreciation rates for different types of assets.
Understanding Pricing Structures for hiring an interior designer for your business design
Interior designers in New Zealand use various pricing structures, each with its pros and cons. Knowing these can help you choose the right designer and pricing model for your project.
1. Hourly Rates
Many interior designers charge by the hour, which can be a flexible option for smaller projects or consultations. Hourly rates can range from $100 to $300 per hour, depending on the designer's experience and location.
This pricing structure allows you to pay for the exact amount of time spent on your project, but costs can add up quickly if the project extends beyond the initial estimate.
2. Flat Fees
For larger projects, some designers offer a flat fee, which covers the entire scope of work. This can be beneficial for budgeting, as you know the total cost upfront. However, it's essential to clarify what is included in the flat fee to avoid unexpected expenses later on.
3. Retainer Fees
Some designers require a retainer fee, which is an upfront payment that secures their services. The retainer is usually deducted from the total cost of the project. This can be beneficial for securing a top designer's availability but requires an upfront financial commitment.
We design functional, thoughtful,
and beautiful homes, fit for real life.
We design functional, thoughtful, and beautiful homes, fit for real life.
At FBD Interiors, our main focus is creating spaces that are both elevated and realistic for your lifestyle. And we walk through every step of the process right alongside you - whether it’s a room refresh, a new kitchen, or a full home makeover/build.
Budgeting Tips for Hiring an Interior Designer for your business design
Creating a realistic budget is essential for a successful interior design project. Here are some tips to help you budget effectively when hiring an interior designer in New Zealand.
1. Set Clear Goals
Before you start your project, define your goals and priorities. Knowing what you want to achieve will help you communicate effectively with your designer and focus your budget on the most important elements.
2. Get Multiple Quotes
It's a good idea to get quotes from several interior designers to compare costs and services. This will give you a better understanding of the market rates and help you find a designer that fits your budget and style.
3. Plan for Contingencies
Unexpected expenses can arise during any design project, so it's wise to set aside a contingency fund. A good rule of thumb is to allocate 10% to 20% of your budget for unforeseen costs.
4. Prioritise Quality Over Quantity
Investing in high-quality materials and craftsmanship can save you money in the long run by reducing maintenance and replacement costs. Focus on essential elements that will have the most significant impact on your space.
5. Communicate Openly
Maintaining open communication with your designer throughout the project can help prevent misunderstandings and keep the project on track. Be upfront about your budget and any concerns you have about costs.
Hiring an interior designer in New Zealand is an investment that can significantly enhance your home's aesthetics and functionality.
By understanding the factors that influence costs, familiarising yourself with different pricing structures, and budgeting wisely, you can achieve your design goals without breaking the bank.
Whether you're planning a small room makeover or a full home renovation, working with a skilled interior designer can help you bring your vision to life.