Keeping track of expenses

Discussion in 'Accounting and Legal Advice' started by gregriv69, Dec 12, 2006.

  1. gregriv69

    gregriv69 New Member

    To make sure you get all the tax deductions you're entitled to, you need to maintain good records of your company's expenses. And because you can't deduct any personal expenses, it's important to keep them separate. For example, you may want to have a bank account just for your business and a credit card for business purchases. If you incur an expense that combines personal and business use, you must divide up the total cost and take the deduction only for the business use.
  2. Anna

    Anna New Member

    I agree Greg, I think it is just much easier to have two separate accounts so there is nothing to deal with in the future between your business and personal bills. [​IMG]
  3. 4u2nv

    4u2nv New Member

    Yes... I have a business checking account. However, do we need to use some sort of payroll system or can we just write ourself a check? I'm just wondering because I just incorporated myself the end of last year and I wasn't sure how we pay ourself from our own business. [​IMG]
  4. BillChechel

    BillChechel New Member

    If you take a substantial amount of money from your business, be careful that you pay social security tax. My accountant advises I take a regular paycheck and pay my share of SS tax. (to keep those auditors away!)

    You can also take owner draws from the business but at some point you need to pay some tax. I live in PA and must pay state taxes throughtout the year not just at the end or I receive a penalty.

    That is why I think a good accountant is critical. You will pay more later with fines and an audit, than you will pay now for accountant fees. Good Luck!!
  5. dmitch31

    dmitch31 New Member

    Quoting: 4u2nvHowever, do we need to use some sort of payroll system or can we just write ourself a check?
    You can just write yourself a check, but like Bill said, you also have to make sure that you take care of all the appropriate government withholding and such. But, you're not required by any means to have some formal payroll processing company.

    Most small businesses don't do that until they get more than a handful of employees. Then outsourcing it is much easier and practical.

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