To write something off for a small business expense, does that expense need to be paid for out of the business account or can I get away with it paid out of my personal account?

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Posted by ForeLSU

The Corner of Sanity and Madness

Member since Sep 2003

41525 posts

Posted on 3/15/09 at 9:30 pm to mtcheral

the company needs to reimburse you for the expense, which creates the entry into your company books. If it can't reimburse you at this time, create a liability called "Expenses Payable" and put the amount into that account.

(assuming this is some type of entity and not just a self-employed setup)

This post was edited on 3/15/09 at 9:32 pm

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Posted by mtcheral

Member since Oct 2008

1936 posts

Posted on 3/15/09 at 9:50 pm to ForeLSU

Well, it's just a little side business LLC that I have with my boss. If it was just me, I'd use the company funds to pay for things like my UC membership and stuff so that I can write them off as entertainment for clients and such. But because he doesn't, I can't. Just looking for a way to get some write offs, legally.

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Posted by Ray Finkle

Collier county

Member since Sep 2007

1643 posts

Posted on 3/16/09 at 9:22 am to mtcheral

Yes you can. Debit - expense Credit - Capital account.

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Posted by Poodlebrain

Way Right of Rex

Member since Jan 2004

19860 posts

Posted on 3/16/09 at 9:34 am to mtcheral

You can claim a deduction either way if the expense is an ordinary and necessary expense of the business. If the business pays the expense it gets recorded as an expense of the LLC, and the deduction is split among the members in accordance with the operating agreement of the LLC. If you pay the expense without reimbursement you can claim a deduction on Schedule E for unreimbursed partnership expenses, and you get to deduct 100% of the expense you paid.

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