How to Keep Personal Expenses Separate from Business Expenses

photo credit: telegraph.co.uk

As a small business owner, keeping your personal expenses separate from your business expenses is as important as keeping the two people you’re casually dating from chatting each other up at Starbucks. Some things are just not meant to be together, and if ever the two do meet, the situation can get a little, well, sticky.

While drinks with Jennifer on Wednesday and dinner with Stacy on Friday may be pretty easy to keep straight, keeping your office supply expenditures separated from your chocolates-and-flowers expenditures may not. So what’s a savvy-but-buy SBA to do?

First of all, brush up on some bedtime reading – that’s right, your favorite piece of literature, the IRS website. Depending on your type of small business, you could be missing out on a bunch of potential business write-offs, or worse, writing off personal expenses as business expenses. Do you know, for example, the rules concerning dining, entertainment and travel expenses? What’s the difference between going out to dinner with a client, and going out to dinner with an employee? What if you’re going out to dinner with Stacy, and she’s an employee? (Wait! Why are you dating your employee? Stop that right now!) The point is to first get super clear about what you can write-off, and when. A good to clue that something’s amiss is if you’re writing off everything, or nothing at all. Once you’re clear on what qualifies, you can begin keeping track of receipts.

You wouldn’t invite Stacy and Jennifer to the same movie, at the same time, on the same night, right? So why would you buy products or shop online for personal expenses and business expenses, pay for everything on one credit card, and get a single receipt?

“Because it’s faster and easier,” I hear you say.

In the extra five seconds it takes you to complete a separate transaction or ask for a separate receipt, you save eons on future headaches (and, let’s get real here, possible fines or even – eep! – jail time).  So if you’re at a store, shopping for business stuff, and happen to grab something that would qualify as personal expenses, annoy the person in line behind you and insist on two receipts. The dude buying kitty litter and batteries may not thank you, but your accountant will.

Now that you have separate receipts for personal expenses and business expenses, what will you do with them? Toss them in the murky depths of your purse or wallet, where they’ll fester and mix together, the ink fading away into un-readable oblivion? No way. You are going to go and get yourself two – that’s right two – big ‘ol Shoeboxed envelopes, and let us scan your stuff separately. At the end of the day when you come home, or first thing in the morning before beginning the work day, put your personal expenses in the envelope next to Jennifer’s picture, and your business expenses in the envelope next to Stacy’s picture. By the time you’ve chosen between the two women, the money you spent courting them will be so scanned and organized, you’ll have saved enough for that engagement ring you’ve been eying! (In case you were wondering, that’s a personal expense).

What’s the weirdest thing you’ve ever written off as a personal expense?

  

Track your Personal Expenses to Attract that Special Somebody

photo credit: getmoneybest.com

Have you ever noticed how you only get what you want when you don’t want like? Like with relationships, for example. When you’re not looking, don’t have the time, or aren’t ready to fall in love, suddenly Mr. and Ms. Right rears his or her gorgeous head. Or, on the flip side, when you’re lonely, pathetically desperate, and longing for love, Cupid is nowhere to be found. If that’s you, one surefire way to bring love into your life is to start keeping track of your personal expenses. No, seriously.

Everyone should keep track of their personal expenses, whether they’re a small business owner, a regular employee, or a professional trust fund baby. First off, there is so much you can write off on your taxes, even as an individual going to and from work every day. Second, tracking your personal expenses helps you plan, develop and maintain a budget – the kind of budget that will help you get organized, save money, and gain confidence. And guess what happens when you’re feeling organized, confident, and you’ve got money to spare? That’s right. Or, should I say, that’s (Mr. and Ms.) Right.

Long gone are the days of furiously scribbling your expenditures in a worn notebook, even entering them into a spreadsheet in Excel. Nowadays, you can be totally lazy while appearing to have your you-know-what together! With the advent of electronic receipts and user-friendly scanning services like those available through Shoeboxed.com, it’s never been to appear organized and totally with it. Except with these awesome digital services that can be used to track and organize your personal expenses, you’ll actually be organized and totally with it.

Money can be a touchy subject between couples, no matter what stage of the relationship they’re in. When you first meet someone, you’re probably not going to discuss writing off mileage or expense reporting tips. (But if you do, PLEASE comment below – we’d love to feature your fantastic affair on our blog!) As things progress, the last thing you want to learn about Mr. and Ms. Perfect is that their personal expenses are a complete mess. Even worse, you certainly don’t want to be the one who’s a financial basket case! As nice as it would be to have your significant other double as a financial adviser, gather your receipts for you and whisk them away in the magic Shoeboxed envelope, the truth is that it’s better to do it yourself. You’ll feel better about every area of your life when that pesky money stuff is accounted for.

If you’re in the market for that special someone, or if you’re in a relationship and things have gotten tired, start scanning your receipts. You’ll feel confident, independent and financially savvy, and you’ll be able to enter into a romance knowing you don’t need the other person to fix your situation – you’ve already done that yourself. Besides, if you keep track of your personal expenses and put yourself on a manageable budget, you just might have some money left over to go on dates.

Would you date someone who was a mess financially?

Do both people need to keep track of their personal finances, or is one organized partner enough?