Tracking Expenses

[SBDreamer]

Hi,

I have been funding this operation out of pocket with my own credit cards and I have never paid for anything with the company account that wasn’t business.

From a tax point of view, all my personal contributions are treated as deductible investment? I am recording them in QuickBooks as regular cards and recording the transaction that I make off them.

Is there any special way I should separate them?

Also, Am I considered an employee of the company? I am not intending to pay myself anything this year as everything will be reinvested into the company, how is that looked on by the IRS any ideas?

Thanks,

Gene,

What type of legal entity are you? (If an LLC, how are you taxed?)

[SBDreamer]

Sole Proprietor

If you're a sole proprietor, you cannot deduct investment money, only money that is lost from your investment. (So if you invest $100,000, and you spend $80,000 of it through the year with no income, then you can deduct the loss of $80,000...)

Are you looking to reimburse yourself or just deduct them for tax purposes? If you're going to deduct the expenses, another account will have to be affected. Essentially, if you bought $2000 worth of stuff and want to deduct it, you have to show that $2000 somewhere in your company. For that, your best bet would be to debit your owner's investment account and credit your bank account the amount of money you're recording. When entering the credit card transactions, debit the bank account and credit the expenditure account.

While you may have never had that money in your checking account, you still need it for the sake of making the transaction wokring.

Also, being a sole proprietor, you're not an employee of the company; you're self-employed. If you were to take a salary, don't click on the Employee's tab, just add yourself as a Miscellaneous name in QuickBooks, and write a regular check to you. The account you'll want to credit is Owner's Draw. This money is still taxable as income, so it doesn't matter whether you take the money or leave it in the company checkbook. You're still going to be paying the same 15.3% in tax at the end of the year.

Evan... an accountant you are not.