Separation Anxiety?

It's not just me being a nag! Keeping your business and personal expenses separate is a necessity, and the Tax Court has just ruled again on this issue.

A man who owned a corporation used its bank account to pay for groceries, a gym membership, his rent, child care and other personal expenses. He comingled funds in his corporate and personal accounts and didn't keep separate expense records.

According to the Tax Court, he is treated as receiving a constructive dividend from the company's payment of his personal expenses (Santos, TC Memo. 2019-148).

Make sure to use separate credit cards and bank accounts for your business and personal expenses. This will not only avoid any potential comingling of funds, but will also help alleviate stress at tax time.