SheckyS01

Member
Joined
Sep 14, 2021
Messages
21
So, I just got my shiny new S-Corp set up and got my corporate book and everything. And I got a bank account for it. And I'm about to buy an existing business.
What are the rules on business expenses?

Most people I've talked to seem to agree that you can lease a car through your S-Corp and that's fine, assuming you use that car to drive to and from your business/office. I already own my car outright, though, and I'm not eager to lease. Can I buy my car insurance through the business?

What about health insurance? I was working for a company and had health coverage and now I will have to get Cobra benefits or buy my own insurance. Can the company buy that for me?

I have an Amazon Prime account for my personal use. Do I need a separate account for the business (assuming the business orders stuff for the business through Amazon)? If I have one for the business and use it for personal use, am I gonna get in trouble with the IRS?

If I do work at home, like paperwork, or advertising online and use my home computer, presumably I can claim part of the cost of the computer as a business expense? What about electricity?

What about my personal cell phone? I'm going to use that for business texts and phone calls. So can I charge that to my corporation?

Is there other, obvious stuff I am missing?
 

Dora Wi

MVP
Joined
Aug 19, 2020
Messages
94
Do you have the opportunity to consult with an accountant? Sometimes what counts as a business expense can be a bit vague, a lot of it is up to interpretation, and it also depends on the specific regulations of the area where you live, but a good accountant should be able to help with specific questions.
 

OSC

Member
Joined
Oct 27, 2021
Messages
3
So, I just got my shiny new S-Corp set up and got my corporate book and everything. And I got a bank account for it. And I'm about to buy an existing business.
What are the rules on business expenses?

Most people I've talked to seem to agree that you can lease a car through your S-Corp and that's fine, assuming you use that car to drive to and from your business/office. I already own my car outright, though, and I'm not eager to lease. Can I buy my car insurance through the business?

What about health insurance? I was working for a company and had health coverage and now I will have to get Cobra benefits or buy my own insurance. Can the company buy that for me?

I have an Amazon Prime account for my personal use. Do I need a separate account for the business (assuming the business orders stuff for the business through Amazon)? If I have one for the business and use it for personal use, am I gonna get in trouble with the IRS?

If I do work at home, like paperwork, or advertising online and use my home computer, presumably I can claim part of the cost of the computer as a business expense? What about electricity?

What about my personal cell phone? I'm going to use that for business texts and phone calls. So can I charge that to my corporation?

Is there other, obvious stuff I am missing?
Hi Dora Wi!
Under no circumstance, pay personal expenses as your business expenses. Keep your personal accounting apart. You do not want issues with IRS, do you?
You can only consider legitimate business expenses that naturally result from your business activities.
You can buy stuff and subscribe as owner's capital for your S-corp. (You can also draw money from the business but keep the records).
Everything that goes inside your business balance comes from one place: either your capital or somebody's else funds.
Consider your accounting system. The first step is a valuable char-of-accounts—no need to get scared.
Good luck.
Let me know if I can be of any help.
 

mirkymirko

Member
Joined
Dec 15, 2021
Messages
18
Answering the headline question.

I think as long as it's for business purposes, anything you spend money on is considered a business expense.

One of the more straightforward examples of a business expense is travel and entertainment expenses. Other types of business expenses can be anything that relates to running and maintaining your business and that helps you produce revenue, e.g office space rental, catering service while hosting an event at your office space, dining chairs for your office pantry, when building out your office, staff compensation to administer the company/project internally or externally, the software you use to make a business run like CRM, eSignature solutions, email host, web host, etc. and more.

So, generally speaking, any money spent with the intention of generating more income may be classified as a business expense. Just be wary though, Whether or not an item qualifies as a valid business expense will generally depend on whether it's required for the specific nature of your firm.
 
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