Why You Should Keep Business and Personal Expenses Separate
Mixing business expenses with your personal life can get messy fast.
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Earlier this year I had to go to Norway for work. My girlfriend wanted to come too, so we combined business with pleasure, staying an extra week to visit Paris and Scotland. Great. But when the trip was over, I realized my finances were a mess. Despite good intentions, I'd mixed personal and business expenses, something I'd vowed never to do.
I'm sure you've done the same thing: made a quick judgment call about the deductibility of an expense, only to end up in a gray area fraught with doubt and the threat of an IRS audit looming over your head. On paper the IRS's Publication 535 lays out its guidelines succinctly, stating that a business expense must be both ordinary and necessary in order to be deducted. But in practice, we all know it's never that simple. In fact, Stephen Fishman's book Deduct It! devotes 500 pages to the subject.
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