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Why You Should Keep Business and Personal Expenses Separate Mixing business expenses with your personal life can get messy fast.

By J.D. Roth

Opinions expressed by Entrepreneur contributors are their own.

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.

It's my belief that things go wrong with deductions when folks make purchases that might be used for business, but aren't. Costco memberships, office furniture or that slick big-screen TV for the home office are some examples that come to mind. I have a friend who deducts every round of golf he plays, whether he's entertaining clients or not. He rationalizes that those client-free rounds are necessary to maintain his skills for client-related games; therefore, they qualify as write-offs. I have my doubts.

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