Whether you're a novice entrepreneur working on your first business, or a seasoned business owner working on your fourth or fifth business, it's important that you keep track of your personal vs. business expenses as the wheels of your company go spinning round and round.
How many times have you used the company card for personal expenses thinking "I'll pay the company back later today"...and then you forget about it, and before you know it, your expenses are mixed up?
How many times do you find yourself scratching your head, wondering if this is a business or a personal expense? There are so many nuanced costs with running a business--it's tough to keep track.
Here's a quick go-to infographic that will remind you what's personal and what's business:
Still confused? Did dinner last night with friends count as a business expense or a personal expense? After all, you gave your buddy some very good advice on how to find a good storage unit in town. It gets blurry, doesn't it?
Here's a few more pro tips to help guide you so you're more positive that your deductions are honest and will fly through the IRS with pretty rainbow colors:
At the end of the day, you want your employees, your investors, and your conscience to feel good about how your using that company card. If you've already won cash investments, prove to your investors that they can trust you to keep the personal vs. business expenses clear and free of each other. You owe it to everyone involved with your company to keep it all separate.
Trust your instincts. You know when you're pusing the envelope.
Deducting Business Expenses. IRS.Gov. Retrieved on September 16, 2014 from http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses
Perez, William. Ordinary and Necessary Expenses For Your Business Are Generally Tax-Deductible. About Money. Retrieved on September 16, 2014 from http://taxes.about.com/od/businessexpenses/qt/BusinessExpense.htm
(2013, October 29) Roth, J.D. Why You Should Keep Business and Personal Expenses Separate. Entrepreneur.com. Retrieved on September 16, 2014 from http://www.entrepreneur.com/article/228329
(2012, November 6) Klein, Karen E. More Reasons Not to Fudge Business Expenses. BloomsberBusinessweek. Retrieved on September 16, 2014 from http://www.businessweek.com/articles/2012-11-06/more-reasons-not-to-fudge-business-expenses
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