ILLMAS Posted March 10, 2021 Report Share Posted March 10, 2021 What are thoughts when a business owner uses business funds to pay for personal expenses like mortgage, groceries, personal health insurance etc....? Again these personal expenses are greater than owner payroll and the prior preparer just booked it as a distribution vs a due from shareholder. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 10, 2021 Report Share Posted March 10, 2021 STOP DOING THAT !! I use Distributions. And, educate the client. I've used Loan to Shareholder if basis is a problem, but want it under $10,000 and going down each year. Fire him. 5 Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted March 10, 2021 Report Share Posted March 10, 2021 1 hour ago, ILLMAS said: booked it as a distribution vs a due from shareholder. It is a distribution. Tell them to stop being lazy and simply transfer the funds to their personal account. Warn them of the legal and tax implications, plus all the extra bookkeeping to enter all those personal disbursements. Then have a separate conversation about reasonable compensation. Document your conversations in your notes or a letter. If they don't stop, consider firing them. 4 Quote Link to comment Share on other sites More sharing options...
Lion EA Posted March 10, 2021 Report Share Posted March 10, 2021 By the way, the "STOP DOING THAT !!" is what I say to the client. As Abby says, it costs him more to have us do the bookkeeping to move his personal expenses to Distributions and rebalance his books. 3 Quote Link to comment Share on other sites More sharing options...
Lee B Posted March 10, 2021 Report Share Posted March 10, 2021 I have way too much experience with this problem. Thank to the All Mighty that all of these clients have sold their businesses, retired or are no longer clients 4 Quote Link to comment Share on other sites More sharing options...
JohnH Posted March 11, 2021 Report Share Posted March 11, 2021 Give them this video: 3 3 Quote Link to comment Share on other sites More sharing options...
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