Start off with two separate bank accounts. For personal assets and resources that you use for business, you will need to track the portion that applies for business. For example, any additional costs incurred on your phone that are business-related as well as miles driven on the vehicle can be accounted for as legitimate business expenses.
The value of the business assets and resources that you use personally would be considered as personal draws from the business. As much as possible, you want to create a separation between the two entities to minimize the IRS disallowing writeoffs due to poor documentation. Document everything for back up with specifics. I would visit with your personal tax accountant for specific details to protect yourself.
Pam Newman is a Certified Management Accountant, author and Certified QuickBooks ProAdvisor for Financial and Point-of-Sale software. She is also president of
RPPC, Inc., which provides customized business development services.
