Two different businesses from home - husband and wife

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Subject Author Date Two different businesses from home - husband and wife Teak 03-15-2009  Re: Two different businesses from home - husband a... Paul Thomas, CPA 03-16-2009   Re: Two different businesses from home - husband ... Steve Pope 03-16-2009  Re: Two different businesses from home - husband a... San Diego CPA 03-22-2009   Re: Two different businesses from home - husband ... Steve Pope 03-22-2009  Re: Two different businesses from home - husband a... San Diego CPA 03-24-2009   Re: Two different businesses from home - husband ... Steve Pope 03-24-2009  Re: Two different businesses from home - husband a... Frank S. Duke, Jr. 03-25-2009   Re: Two different businesses from home - husband ... Steve Pope 03-25-2009
Posted by Teak on March 15, 2009, 8:53 pm Please log in for more thread options Greetings - My fiance and I are both self-employed. We work in different professions. I am a freelance communications professional. He has his own photography business. I have very few expenses. He has many big expenses -- equipment, insurance for equipment, etc. and a separate checking account set up for his business. We are getting married and I want to create a joint checking account for common/household expenses; however, we each deduct a portion of these shared expenses (mortgage, property taxes, utilities) on our individual taxes (Schedule Cs). What is the best way to do this? We will file jointly next year. Can we pay these shared expenses from a joint account and then each claim a portion for deductions on our separate Schedule Cs (assuming there is no double dipping)? Also - I assume he should keep his separate checking account to account for his business, right? Thank you. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Paul Thomas, CPA on March 16, 2009, 7:40 am Please log in for more thread options > My fiance and I are both self-employed. We work in different > professions. I am a freelance communications professional. He has his > own photography business. I have very few expenses. He has many big > expenses -- equipment, insurance for equipment, etc. and a separate > checking account set up for his business. > > We are getting married and I want to create a joint checking account > for common/household expenses; however, we each deduct a portion of > these shared expenses (mortgage, property taxes, utilities) on our > individual taxes (Schedule Cs). What is the best way to do this? You each should have separate checking accounts for each business and at least one other joint account for personal non-business income to be deposited into and personal expenses to be paid from. At the end of the year you can pull the household expenses that relate to the "home office" deductions from the joint personal account, leaving the rest of the business accounting to be culled from each business checkbook. > We will file jointly next year. Can we pay these shared expenses from a > joint account and then each claim a portion for deductions on our > separate Schedule Cs (assuming there is no double dipping)? > > Also - I assume he should keep his separate checking account to > account for his business, right? Right. -- Paul Thomas, CPA Watkinsville, Georgia -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on March 16, 2009, 2:20 pm Please log in for more thread options >You each should have separate checking accounts for each business and at >least one other joint account for personal non-business income to be >deposited into and personal expenses to be paid from. >At the end of the year you can pull the household expenses that relate to >the "home office" deductions from the joint personal account, leaving the >rest of the business accounting to be culled from each business checkbook. How important is this? My wife and I each run a business, reported on Schedule C, but neight of us has ever had a business checking account. We each maintain books that contain business revenues and expenses, but we only have one personal, joint, checking account and no other checking accounts. Is this problematical? Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by San Diego CPA on March 22, 2009, 6:27 pm Please log in for more thread options > >>You each should have separate checking accounts for each business and at >>least one other joint account for personal non-business income to be >>deposited into and personal expenses to be paid from. > >>At the end of the year you can pull the household expenses that relate to >>the "home office" deductions from the joint personal account, leaving the >>rest of the business accounting to be culled from each business checkbook. > > How important is this? My wife and I each run a business, > reported on Schedule C, but neight of us has ever had > a business checking account. We each maintain books that > contain business revenues and expenses, but we only have > one personal, joint, checking account and no other > checking accounts. > > Is this problematical? > > Steve Separating business & personal accounts is vitally important. Where you are self-employed, whether a small "side business", your primary source of living or anything in between, you should always have separate accounts used exclusively for business purposes which separate your business and personal finances. The risk of comingling business & personal assets/funds is that the IRS will take the position that the expenditures are personal, not business. While the burden of proof is always on the taxpayer, comingling asset significantly increase the burden of proving business vs. personal expenditures. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Steve Pope on March 22, 2009, 8:12 pm Please log in for more thread options >>>You each should have separate checking accounts for each business and at >>>least one other joint account for personal non-business income to be >>>deposited into and personal expenses to be paid from. >>>At the end of the year you can pull the household expenses that relate to >>>the "home office" deductions from the joint personal account, leaving the >>>rest of the business accounting to be culled from each business checkbook. >> How important is this? My wife and I each run a business, >> reported on Schedule C, but neither of us has ever had >> a business checking account. We each maintain books that >> contain business revenues and expenses, but we only have >> one personal, joint, checking account and no other >> checking accounts. >> Is this problematical? >Separating business & personal accounts is vitally important. >Where you are self-employed, whether a small "side business", >your primary source of living or anything in between, you should >always have separate accounts used exclusively for business purposes >which separate your business and personal finances. The risk >of comingling business & personal assets/funds is that the IRS will >take the position that the expenditures are personal, not business. While >the burden of proof is always on the taxpayer, comingling asset >significantly increase the burden of proving business vs. personal >expenditures. Thank you. Is this opinion backed up by experience from IRS examinations? Say, if one client has a business checking account, and another does not, and they both have adequate expense records otherwise (receipts, contemporaneous records describing business purpose, etc.), the second client loses out in the examination more than the first? I'm very curious to know if this is an actual as opposed to a theoretical concern. I write about three business-purpose checks per year on our personal checking account and my wife writes none. In addition health insurance is deducted from this account. Am I exposed? It would be quite a hassle to set up two new bank accounts that we don't really need and would barely use, transfer money into them, etc. Steve -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Husband and Wife both work from home... February 19, 2009, 8:41 am Husband / Wife, Joint Venture? September 23, 2007, 7:44 pm Re: Husband / Wife, Joint Venture? 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