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How do I reimburse myself for things I paid personally for my business?
Ideally you should pay for business expenses with a company bank account our credit card, but if you pay for expenses with personal funds you can reimburse yourself from the company using what we call an accountable plan.
An accountable plan allows owners to turn in expense reports for reimbursement of expense items that are typically mixed business and personal expenses such as mileage, cell phone, internet and home office expenses to name a few. These expense reports can be done monthly, quarterly or even annually and it is important that you document those expenses to allow you to deduct them from your business income.
To qualify as an accountable plan, the company reimbursement or allowance arrangement must include all the following rules.
1. Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services for the company.
2. You must adequately account to the company for these expenses within a reasonable period.
3. You must return any excess reimbursement or allowance within a reasonable period.
Please contact us at FMA, C.P.A. to get you started on capturing these expenses that are often missed.
This is another Question ForMy Account. If you have a question or are looking for business advisory services or business tax services in Clearwater, Largo, Dunedin, Oldsmar, Lutz or Land O’ Lakes, contact FMA, C.P.A. and let us show you the way!