Especially when a business is new, owners pay for business expenses personally all the time. Maybe you bought the laptop before the business checking account was even open. Maybe the business card wasn’t with you. Maybe there simply wasn’t enough money in the business account yet. The important part is making sure the books reflect what actually happened. If you put your own money into the business, that doesn’t mean the business suddenly earned income. And if you personally paid a legitimate business expense, that expense doesn’t stop belonging to the business just because a personal card was used. 𝗣𝗿𝗲𝗺𝗶𝘂𝗺 𝗺𝗲𝗺𝗯𝗲𝗿𝘀: If you’ve done this and aren’t quite sure what it means for your books, take a look at the 𝗪𝗵𝗲𝗻 𝗠𝗼𝗻𝗲𝘆 𝗢𝘃𝗲𝗿𝗹𝗮𝗽𝘀 lesson in 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 & 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗙𝗶𝗻𝗮𝗻𝗰𝗲𝘀 𝗠𝗮𝗱𝗲 𝗖𝗹𝗲𝗮𝗿. The 𝗢𝘄𝗻𝗲𝗿 𝗖𝗼𝗻𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻𝘀 𝗮𝘁 𝗮 𝗚𝗹𝗮𝗻𝗰𝗲 resource gives you a quick reference for what’s happening when personal money goes into the business and how to think about it in your records.

Your internet is at your house, but you use it to run your business. Your cell phone is personal, but clients call you on it. Maybe you have a vehicle you use for both business and personal driving. Those expenses are where people often get stuck because there isn’t always a nice clean line between the two. What you don’t want to do is make up a new answer every month depending on how you feel when you’re doing the bookkeeping. Figure out what portion is legitimately connected to the business, document how you arrived at it, and handle it consistently. Depending on the expense and your situation, you may also need guidance from your tax professional about the appropriate treatment. The goal is for someone looking at your records later to be able to understand what you did and why. If you find yourself staring at an expense wondering whether it belongs to the business or to you personally, check out the 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝘃𝘀 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗧𝗿𝗲𝗲 in the 𝗘𝘀𝘀𝗲𝗻𝘁𝗶𝗮𝗹 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗥𝗲𝘀𝗼𝘂𝗿𝗰𝗲 𝗟𝗶𝗯𝗿𝗮𝗿𝘆. It gives you questions to work through instead of just guessing. You can also find more on this in the 𝗨𝗻𝗱𝗲𝗿𝘀𝘁𝗮𝗻𝗱𝗶𝗻𝗴 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗠𝗼𝗻𝗲𝘆 𝘃𝘀 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗠𝗼𝗻𝗲𝘆 course, including the 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝘃𝘀 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗘𝘅𝗽𝗲𝗻𝘀𝗲 𝗦𝗰𝗲𝗻𝗮𝗿𝗶𝗼 𝗠𝗶𝗻𝗶-𝗚𝘂𝗶𝗱𝗲, which walks through some of the situations where the answer isn’t immediately obvious. 𝗣𝗿𝗲𝗺𝗶𝘂𝗺 𝗺𝗲𝗺𝗯𝗲𝗿𝘀: This is also Lesson 1 of 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 & 𝗣𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗙𝗶𝗻𝗮𝗻𝗰𝗲𝘀 𝗠𝗮𝗱𝗲 𝗖𝗹𝗲𝗮𝗿, so you already have access to it as part of that course.

This one can really throw business owners. Your Profit & Loss says the business made $60,000, and you’re thinking, “Well, I sure as heck didn’t take home $60,000.” Those are two different things. Depending on your business structure and how you’re paid, money you take out of the business may not show up as an expense on your Profit & Loss. That report is showing the income and expenses of the business, not necessarily how much money ended up in your personal checking account. This is one of those areas where understanding what a report is designed to tell you matters. Otherwise, you can look at a perfectly accurate number and think something must be wrong because it doesn’t match the number you had in your head.

You run into Walmart for printer paper and ink. While you’re there, you grab dog food, shampoo and something for dinner. One receipt. Two different parts of your life. Real life doesn’t always divide itself neatly into “business” and “personal.” The important thing is that your bookkeeping does. That doesn’t mean you can never make a mixed purchase or that something terrible has happened if you accidentally use the wrong card. It means you need to recognize what happened and document the business portion correctly instead of throwing the entire Walmart trip into office supplies because some printer paper happened to be in the cart. The question isn’t just, “Did I spend money?” It’s, “Why did I spend it, and what actually belongs to the business?”