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Mixing Personal and Business Expenses

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im4gin3th4t

Junior Member
What is the name of your state (only U.S. law)? TX

I am a bookkeeper for a small S corporation. My boss asks me to classify his personal expenses (such as groceries, his girlfriends rent and utilities, one time a locksmith for his girlfriends car, his brother's car payments etc.) I am not sure if this is legal and whether it is or isn't it makes me feel uncomfortable and I am looking for a new job. But I am afraid if this is illegal and the company gets audited then I will be held liable. Advice on legality and liability please?
 


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tranquility

Senior Member
The bookkeeper would not strictly be held liable, but the owner will probably blame her anyway.

While commingling is not "illegal", it certainly has implications. One implication is in regards to taxes. Filing S-corp returns based on such numbers would not be correct and, with intent, be illegal. Another implication is if there are any other shareholders in the corporation.
 
A

Antigone*

Senior Member
im4gin3th4t said:
What is the name of your state (only U.S. law)? TX

I am a bookkeeper for a small S corporation. My boss asks me to classify his personal expenses (such as groceries, his girlfriends rent and utilities, one time a locksmith for his girlfriends car, his brother's car payments etc.) I am not sure if this is legal and whether it is or isn't it makes me feel uncomfortable and I am looking for a new job. But I am afraid if this is illegal and the company gets audited then I will be held liable. Advice on legality and liability please?
Click to expand...
If he is the sole owner of the company andhe is asking you to do this it is not illegal. It might come back to bite him in the behind later, but it would not be illegal.
 
J

JillRogers

Junior Member
Under the Internal Revenue Code those expenses should be classified as member's draw since they are not business related. The expenses can also be classified as an asset account called Due from Owner.
 
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