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How do I keep track of expenses outside the business account?
What do I do about those expenses that come out of my personal accounts? I don't really know how to track these.
For example, I pay rent each month out of my personal bank account. This is not completely tax deductible, but a small portion of it is. There are other bills that overlap as well. Electricity, Phone, Internet, etc...
Since you guys designed this for small businesses, is there a good way to track these sort of expenses without having to manage the entire personal account through LA as well?
For example, I pay rent each month out of my personal bank account. This is not completely tax deductible, but a small portion of it is. There are other bills that overlap as well. Electricity, Phone, Internet, etc...
Since you guys designed this for small businesses, is there a good way to track these sort of expenses without having to manage the entire personal account through LA as well?
I’m hoping for a great solution
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You could write a business check made payable to you reimbursing the business portion of expenses paid personally.
This practice does not violate the required separation of corporate and personal funds. Thus you keep in tact your corporate veil protection. The trick is to make sure you have the correct allocation of business vs personal expenses. For proper allocation of office in home deductions you need to read the IRS publication 587. This publication can be downloaded from irs.gov in pdf for html format. When reading be sure to first study the qualifications for office in home deductions on page 2. Then if you do
truly qualify review page 6 on how to set up the allocation formula.
The single reimbursement check should then be categorized into the specific business deductions areas such as rent or utilities for tax filing next year.
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Inappropriate?You should NEVER pay for anything for your company through your business account. In a lawsuit, this will allow a lawyer to break "the corporate seal" and would allow them to take your personal assets. This is not good accounting practices, so we do not give functionality to accommodate for it. However you can create an expense and NOT assign it to a bank account using "How did you pay?". This bypasses the accountability of the bank accounts.
I’m thankful
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I have heard of that but I'm speaking more about things like my rent for my apartment which happens to include my office and my personal internet that my business uses as well. Im sure I'm not the only one facing this situation. Is what I just mentioned part of the piercing? If so, how do I make it right? -
Inappropriate?Hi Josh,
The way my family handles this is we have a second "Business" that is for our family expenses. We don't send any invoices through that business, but we do track our money. -
Inappropriate?You could write a business check made payable to you reimbursing the business portion of expenses paid personally.
This practice does not violate the required separation of corporate and personal funds. Thus you keep in tact your corporate veil protection. The trick is to make sure you have the correct allocation of business vs personal expenses. For proper allocation of office in home deductions you need to read the IRS publication 587. This publication can be downloaded from irs.gov in pdf for html format. When reading be sure to first study the qualifications for office in home deductions on page 2. Then if you do
truly qualify review page 6 on how to set up the allocation formula.
The single reimbursement check should then be categorized into the specific business deductions areas such as rent or utilities for tax filing next year.
I’m answering accounting questions
The company says
this answers the question
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Would you say this should be something I do every month? A reimbursement "rent" package that the company pays to myself? This sounds like a great solution. Thanks for the advice!
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