Keep Your Personal and Business Expenses Separate

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Well, it’s back to school and back to work time. And for many of us that means that it’s time to start cleaning out all the receipts we have stuck all over the car, purse, wallet, pockets, whatever handy spot you have.

In a perfect world, you will always pay for business expenses with a business check or a business credit card. And you’ll always for your personal expenses with a personal check, cash or a personal credit card. Most of us, though, get caught sometimes seeing something we need and not having the right card with us. And, yes, I’m a CPA, you’d think I would know better.

This is a great time to sort through those receipts and figure out whether you’ve paid for the items from the correct account. If your credit receipts have faded in the sun, you can read them again by heating them up with a hair dryer or iron. (No kidding! I even did an online workshop on it once because I had a client question about that.)

In the future, you might think about copying the receipt so you have a readable copy in case the IRS ever asks.

If you have business receipts for items you purchased with personal money, reimburse yourself from the business before year end. If you have a fledgling business, you might not have enough cash in the account to do that. In that case, make a loan to the company and then write the check. This creates an audit trail for the business expenses. It also will record the expense for tax purposes.

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