For my small incorporated business, can I buy something for my personal self and charge it to the business then later reimburse the business?

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For my small incorporated business, can I buy something for my personal self and charge it to the business then later reimburse the business?

So, the business isn’t buying it really, it’s just the middle man.

Asked on January 9, 2012 under Business Law, Kansas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Assuming you control the business, you can direct the business to make any expenditures or purchases you like. The issue is about taxes:

1) An expenditure is only tax deductable for a business if it serves a business purpose and is for the business's benefit;

2) You would have to pay taxes on any purchases or expenses paid on your behalf, unless you reimburse them.

So, for example, if you were willing to not have the business be able to deduct the purchase, and to pay taxes on its value yourself, you could have the busines buy it for you and not reimburse it. If you do what you write, everything should end up being tax neutral, since you are reimbursing the business--i.e. while it can't can't deduct the expense, nor it is gaining income from your reimbursement; and you are not gaining income either, since you end up paying.


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