Can I Write Off Personal Expenses Through My Business?

The answer to this question is no. If you meant “can you write off business expenses that you paid personally?” then the answer is yes. People going into business for the first time may have the misconception that a privilege of owning a business is personal write-offs because the expense is paid from their business bank account. This is not a good idea and is actually illegal. If you do it and you get caught, you will end up paying penalties and interest. Not only that, but if the amounts are big enough, you may even go to jail!

Are you scared straight yet? If you’re not sure whether an expense is deductible here is a good test. If you were an employee of a stable and well run company and paid for this expense personally, would that company reimburse you for it? If so, you should probably be able to write it off in your company. If there is any hesitation, steer clear of writing off this expense.

If you are still mulling over writing off an expense that could be deemed improper, consider this: If you were sitting in an IRS audit, would you feel comfortable explaining to the agent why this was a “necessary business expense?” If yes, then you are probably pretty safe expensing it to your company. If not, error on the side of safety and don’t write it off. This way if you get audited, you can bring this expense up and possibly get a credit!

There is no replacement for expert advice. Keep track of all of your expenses and then review the “questionable” ones with your tax preparer before you sign and send in your tax return.