Accounting & Bookkeeping & Small Business Forum

Guest · Posted: Sun Jan 04, 2004 11:00 am Post subject: Home office expenses

When a Consulting business, registered as an LLC works out of their home, would you reflect the proportionate expenses from this home in the LLC's income statement? Example:

Home office occupies 20% of the home. Would the P&L show 20% of the utility, and rent costs?

Guest · Posted: Mon Jan 05, 2004 7:15 am Post subject: RE: Home office expenses

Peggy: It depends if you are talking about entries for book purposes or for tax purposes. If you are talking about the LLc's books, then you would cr cash for the payment and debit owners equity. I am assuming the LLc is a sole proprietor for tax purposes.

If you are talking about the entries for tax purpose then it depends on your state law. (Will you file as a corp or sch c.) Also, be advised that the IRS frowns on a corp owner taking a home office deduction, and can consider it as a nondeductible personal exp. except for home interewst an real estate tax if you itemize.

Guest · Posted: Wed Jun 01, 2005 12:36 pm Post subject: RE: Home office expenses

Regarding reporting expenses for book purposes, how would you document a percentage of an expense that is paid out of the owner’s personal account? Ex: Phone bill includes many services these days all in one bill and the owner pays the phone bill out of his own personal account. Since the owner’s draw for personal expenses is already debited and the cash is credited in the business account, would you DR the Expense acct and CR the owner’s draw the percentage the business uses? How would you handle this for book purposes only. And if you answer with “have the customer pay the the entire phone bill out of his business”, what type of entry would you make to adjust the amount?