![]() ![]() The business shouldn’t directly pay any expenses of your personal vehicle, even for fuel that will be used entirely for business. Aside from QuickBooks, there are other mileage tracker apps that can categorize personal and business trips, plan routes, or maintain timesheets. Software like QuickBooks Online can track your mileage automatically using the GPS in your smartphone, which is much easier than trying to do so manually. Track the date, miles, and purpose of each business trip, and then submit it for reimbursement with your monthly expenses as explained in tip three above. Your business can deduct a standard rate per mile― 65.5 cents for 2023―for any business mileage that you drive using your personal vehicle. It also provides an audit trail to substantiate the deduction if questioned by the IRS. While this is a bit of a hassle, it’ll guarantee that your bookkeeper deducts the expenses since they were paid with a check from the business account. Your business then writes you a check for the exact amount. List the expenses along with the date, vendor, and purpose on a spreadsheet and attach the receipts. ![]() The process for reimbursing yourself should be the same as for employees. ![]() This should be a separate check from your monthly salary. To do so, have the company write you a check to reimburse the expense you paid with personal funds. Remember, the golden rule says these business expenses should appear in your business bank account. Reimburse Yourself for Business Expensesĭespite your best efforts, there’ll be times when you pay for a business expense with personal funds. It covers the factors affecting an S-corp reasonable salary.ģ. Our guide on reasonable salary for an S-corp shareholder may be of interest to you. Instead of numerous transactions during the month where the business pays an expense on your behalf, have the business write you one check per month that you deposit into a separate account used to pay your personal expenses. Paying yourself a salary reinforces the notion that your business is a separate entity and reduces the need for you to violate tip number one by having your business pay your personal expenses directly. If you need assistance, check out our article on how to pay yourself from your business. However, I suggest that self-employed owners, freelancers, and partners also pay themselves a “salary,” although it’ll technically be an owner’s draw and excluded from payroll. Owners of C corporations (C-corps) and S corporations (S-corps) must pay themselves a reasonable salary and run it through the payroll system like any other employee. For more guidance in this area, read our guide on how to separate business and personal finances. While the goal should be to completely segregate business and personal expenses coming out of your credit cards and bank accounts, you can also use business expense tracker apps to filter out personal expenses with just one swipe. Sorting through personal transactions in your business account is time-consuming, is expensive, and can lead to mistakes. Corporations and limited liability companies (LLCs) that commingle the funds of the company with funds of the owners can lose the liability protection typically afforded to these entities. Legal tip from Lea Uradu, JD: Keeping personal finances separate is more than just good bookkeeping. ![]()
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