Jun 2, 2008

Keeping up with your Business Expenses

One element that is most common among those that are self employed is a lack of understanding when it comes to business expenses. It seems that most self employed individuals are unaware that they need to not only keep some type of account ledger to track and prove expenses, but also that they need to have a separate business account from their own individual one.

Not only does the IRS frown on using the same bank account for individual use and business use, which they consider "co-mingling funds", it also makes you more susceptible to assessment, should you ever be audited. The proper way of handling business expenses can be found at the IRS.gov website or you can click on the link above.

Here are a few tips to keep in mind to help manage and keep record of your business expenses.
1. Open and keep separate business accounts and personal accounts
2. Only use the business account for business expenses- if you are going to pay yourself, write a check from the business account- state what it is for in the memo section and deposit it in your personal account. Don't just transfer the funds from one account to another.
3. Keep and document cancelled checks and receipts

For those that have a hard time managing their business expenses, especially for those that are independent contractors, there are several businesses that will manage this for you for a nominal fee. One of the best that I have found is http://www.mbopartners.com/.

0 responses:

  © Blogger templates The Professional Template by Ourblogtemplates.com 2008

Back to TOP