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Old 10-01-2008, 12:37 PM   #1
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Personal vs Business Finance/Accounting

Hi guys,

As i work on setting up quickbooks i encountered the issue of personal vs business finances.

Our company operates from home. so i'm not sure if I should include items such as utilities, internet, cell phone etc... as personal or business expense.

My goal is to figure out the company's overhead.

how did you guys handle it when you started it up?

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Old 10-01-2008, 12:50 PM   #2
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Quote:
Originally Posted by Igal View Post
Hi guys,

As i work on setting up quickbooks i encountered the issue of personal vs business finances.

Our company operates from home. so i'm not sure if I should include items such as utilities, internet, cell phone etc... as personal or business expense.

My goal is to figure out the company's overhead.

how did you guys handle it when you started it up?
I have a home office. My company writes a check to me for rent.

I have a seperate phone, internet for the office which the company pays
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Old 10-01-2008, 07:03 PM   #3
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We do the same as Rory, pay ourselves rent for the office. This is a good tax move too because you don't pay self-employment tax on the rent income.
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Old 10-01-2008, 07:19 PM   #4
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Originally Posted by Igal View Post

My goal is to figure out the company's overhead.

how did you guys handle it when you started it up?
How long have you been in business?

Good Luck
Dave
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Old 10-01-2008, 07:27 PM   #5
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Quote:
Originally Posted by Igal View Post
Hi guys,

As i work on setting up quickbooks i encountered the issue of personal vs business finances.

Our company operates from home. so i'm not sure if I should include items such as utilities, internet, cell phone etc... as personal or business expense.

My goal is to figure out the company's overhead.

how did you guys handle it when you started it up?
Buy Micheal stone's Mark up and profit book and mark up calculator cd. The best money you will ever spend

Last edited by rbsremodeling; 10-01-2008 at 07:42 PM.
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Old 10-01-2008, 07:29 PM   #6
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By Micheal stone's Mark up and profit book and mark up calculator cd. The best money you will ever spend
I'll second that in favor of the answer I was considering. That is where I learned to do it myself.

Good Luck
Dave
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Old 10-01-2008, 08:18 PM   #7
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Our company operates from home. so i'm not sure if I should include items such as utilities, internet, cell phone etc... as personal or business expense.
Internet - biz expense
Cell phone - biz exspense
utilities - % based on square footage of your office
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Old 10-01-2008, 09:20 PM   #9
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How long have you been in business?

Good Luck
Dave
My dad started on his own this this January and i joined him 3-4 weeks ago.
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Old 10-01-2008, 09:29 PM   #10
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We do the same as Rory, pay ourselves rent for the office. This is a good tax move too because you don't pay self-employment tax on the rent income.
I was just about to ask that. Are there any other tax consequences such as would this turn the house to an income property rather than owner occupied that might create an issue when selling the house (capital gain)?

Thanks again for all the great advice.
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Old 10-01-2008, 09:33 PM   #11
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My dad started on his own this this January and i joined him 3-4 weeks ago.
Congratulations to you both.

Get and read the book. You can use what you learn and look over your records from Jan. to today and you will have a close picture of what your overhead is now. You will also learn what to identify as overhead and what to identify as job related expenses. This will allow you to predict your overhead going forward, according to your plans and goals.

You'll also be aware of what to include over and above materials and labor when quoting a job.

I took M. Stone's advice in chapter 1 and suggest you try it also.

How is your workload now? Hopefully your busy.

Good Luck
Dave
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Old 10-01-2008, 09:33 PM   #12
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This is a question for your CPA based on how he would like to do your taxes.

You can pay yourself check for rent per year or declare a portion of your home as a business expense.

They are the ones that will tell you what your options are.

One way to deal with all this is not to worry with it and if you're a corp, then you can move a portion or all of the disallowed expenses the company has paid into a note to shareholders account in your chart of accounts and claim it as income from the company.
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Old 10-01-2008, 09:39 PM   #13
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Originally Posted by Igal View Post
I was just about to ask that. Are there any other tax consequences such as would this turn the house to an income property rather than owner occupied that might create an issue when selling the house (capital gain)?

Thanks again for all the great advice.
Them questions are best directed at your own accountant/tax adviser. The answers are too important.

Good Luck
Dave
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Old 11-19-2008, 05:25 PM   #14
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I've also read that running a deduction for business use of your home raises a red flag-if you're looking for fewer red flags, eat the cost. It's not that much anyway-figure your office is 150sqft of a 2200 sqft home and mortgage is $1400, you're looking at $96/month. I think its the idea of paying yourself $500/mo for rental of the space that raises the red flag...but I'm not a CPA.

I believe they do calculate the square footage when determining value.
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