Tax and business account question

[stevenf]

I have been depositing all of my payments into my personal account. I have kept track of every cent I have earned so far and was planning on doing my taxes based on my recordings. The other day I tried to deposit a check that was made out to my business and the bank said it has to be in a business account. I will now be opening a business account and was wondering how this works. Can I do taxes like I was planning on doing or do I have to deposit everything into the business account as proof? Do you get tax breaks if you "pay yourself" out of the business account or do you guys just use your business account as your primary personal account?

[Big C]

This is what my CPA told me to do:

1) Open a business acct and keep it totally seperate from your personal accts

2)At the end of the year or quarter(whichever is best for you) get a print out of all the transactions from your business acct.This will show all deposits, thus all of your income for the business.

3)Keep all expense receipts in a shoe box, or zip lock bag seperated by quarter.

4)When tax time comes I will bring my business acct statements and expense receipts to her and she will handle the rest....her advice to me was to keep my record keeping as simple as possible.

[Paulup]

Like BigC said, keeping business and personal accounts entirely separate is the best business practice you can start.

Since you've already goofed, you should be able to transfer all of that money from your personal account, but only if you have the receipts. Depositing it only into a business acct and printing the monthly statement makes tax accounting easier, but is certainly not a requirement.

[lawnman_scott]

You dont have to work too hard to prove you made money, its the expences you have to prove. If you said you made $1,000,000 but cant really prove it, and pay your taxes because you owe them do you think the IRS will come after you?

[stevenf]

Well how do you pay yourself? Do you deposit everything into the business account just so you can have a statement as record of it, then take out as much as you want?
Im just starting this year so Im in need of every penny I make.

[mngrassguy]

Just write a bus check to yourself and deposit it in your personal account. Thats called "a paper trail".

[Paulup]

Write yourself a paycheck, log it as payroll.

An easier way to do it, if you don't know how much to pay yourself monthly but need cash... Write yourself "bonus" checks when you need money from the company account. At the end of the year, you can cut yourself a series of "pay" checks for small amounts to give yourself a round number for your annual pay. Your CPA should be able to figure it all out for you. My father runs his own business, thats how he has always done it and its worked out well for him so far. 25 years running.

[ALC-GregH]

I was told by a cpa that you just need to withhold a percentage of your gross income to pay your taxes and your expenses. After that, you can bank the rest. First you must know what the percentage is though.