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    Personal vs Business Expenses
    So I know pretty much all small business owners tack personal expenses onto their business when reasonable to do so.

    My question is what is the best way to do this while still being able to keep a clear picture of what the business is actually making, as opposed to what it seems to be making after your personal expenses are deducted?

    Is keeping 2 sets of books the only way?


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    Hi Steve,

    Here's how to track your personal and business expenses separately -- even when you charge them to your business.

    For all actual business expenses -- use a business card and bank account.
    For all personal expenses you charge to the business -- use your personal bank card and bank account.

    Then to charge the 'personal' expenses to your business -- you expense them in the business as a 'loan from owner' to the business. This way at the end of the year you will know the personal expenses you charged to the business by looking at the 'loan from owner' account. Plus you will also have charged all your expenses to the business.


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    one way i have used is to use 2 different categories during the year, like office expenses and office supplies, with one being more of the hybrid deductions.

    but i would combine at the end of the year other wise under audit you have put all the semi deductible eggs in one basket.

    it is important ot back out these owner expenses when preparing the company for sale

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    It's not an easy quest to answer, because this is somewhat difficult to expose the solution. But I'm using accounting tool Apptivo for managing both my personal and business accounts. It contains some interesting things for maintaining business accounts, I customized it based on my business needs and personal use. Few instances, list out all my expenses in appropriate names, keep all financial transactions, generate invoices/billing for my customers as per service offered or my choice, etc. After I jump up into this tool, my entire accounts maintain properly.


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    Separating personal expenses from business expenses is key to claiming legitimate business deductions. While filing business tax returns, be sure to claim only those deductions that are genuinely associated with your business operations. If unsure, you should turn to a professional rather than handle it yourself.


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    The easiest way is to transfer money from your business account into a personal account. Plus, it also makes it easier for underwriters when applying for a loan to understand what expenses your business has


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    list out all my expenses in appropriate names, keep all financial transactions, generate invoices/billing for my customers as per service offered or my choice, etc.


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    Yeah, I am using accounting tool Apptivo for managing both my personal and business accounts.


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    It need to be used for business. You can allocate the amount of the expense is used for Business and personal. This amount world be a business expense


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    Chris
    Please visit my website for all your Income Tax Santa Paula needs..
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    Hello
    Ankit ,
    I agree with you, It is important to use a different bank account for business and personal expenses to know actual amount utilize for business.
    Thanks!!


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