Mixed Personal and Business accounts

[Anthony]

On Nov 26, 2007 9:14 AM, Mike or Penny Novack <stepbystepfarm at mtdata.com> wrote:
> BTW -- need to get an accountant to speak here as I am not qualified to
> give tax advice, but I suspect that at end of year you would need to do
> more than compare drawings and "income from business" (depending on the
> form of the business, business income not yet distributed to the owners
> but retained by the business might nevertheless need to be considered
> "income from business" for tax purposes).
>
The details depend greatly on the type of business: sole proprietor,
partnership, S-corporation, C-corporation (under the right
circumstances an LLC can elect to be treated as any of these).

In the case of a sole proprietorship, owner transfers to/from the
business are irrelevant from a tax standpoint.  The business and the
individual are a single entity.  Income to the business is income to
the individual, regardless of whether or not it is transferred to a
personal account or kept in a business account.  It generally goes,
along with business expenses, on a schedule C (though there are lots
of situations where it might go somewhere else).  If you're running
something other than a sole proprietorship, then the answers you've
been given so far about how to set up your books and record transfers
are really incomplete.

I'm an accountant specializing in taxes, but this is not a "covered
opinion".  As such, nothing in this email is intended or written to be
used, and it cannot be used, by any taxpayer for the purpose of
avoiding penalties that may be imposed on the taxpayer.