Once we incorporated our business in the spring of 2006, we officially split our business finances from our personal finances. Obviously that isn’t entirely true, since the business is our main source of income, and we are the only two employees. If the business makes money, we make money – if it doesn’t, we feel the pinch. But technically, we’re different entities.
Since I’m very aware that every penny the business spends is less money that can be used to pay our salaries and dividends, I make sure that there is no unnecessary corporate spending. The business goes through about $700/month on internet, phone, advertising, quote software, and the few other odds and ends we need to keep it running well.
Last year, our total business expense for ‘meals and entertainment’ was zero. Seriously. We stopped meeting with clients about three years ago when we started being able to do almost all of our work over the internet and phone, and now we physically meet with clients maybe two or three times per year. We didn’t need to spend a dime on entertaining last year, so we didn’t. Much to the chagrin of the accountant I started using on a consultation basis earlier this year. She told me that we need to be having business meetings when we go out to dinner and writing them off. I told her that we just really don’t go out to eat that much. The other reason was that I’m always erring on the side of caution when it comes to taking deductions, so when we do have a $15 dinner out, we just pay for it with “our” money instead of business money.
My husband has been reminding me of the accountant’s advice, and has suggested that tomorrow night we go for a long bike ride that ends at Baja Fresh. He mentioned that if we designate dinner as our time to catch up on work stuff for the week, we can put it on the business card and deduct it (well, half of it anyway). So Baja Fresh, here we come. It will be our first ‘meals and entertainment’ expense for the year, and it will come in at under $20. Not exactly big corporate spending, but a good baby step for me.
The nice bonus is that I won’t have to list it as an expense when I total up our expenses for August. It will lessen the amount available for our pay this month, but it won’t be a personal expense. I promise not to make a habit of it.