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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 15480
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Hi There! I use my personal vehicle for travel as part of my

Resolved Question:

Hi There! I use my personal vehicle for travel as part of my start-up LLC business. I keep track of my miles to a client, but I do not want to be reimbursed since I wanted to write-it off as a business expense. How do I track the business expense in Xero without decreasing my bank account? Or do I reimburse myself for reconciliation to work?
Submitted: 11 months ago.
Category: Finance
Expert:  Megan C replied 11 months ago.

Megan C :

Hello and welcome. Thanks for your question, and thanks for asking for me.

Customer:

No problem. You have always been so patient and helpful :)

Megan C :

I'm glad to have you back.

Megan C :

This is a tax expense, so you wouldn't have to track it in Xero

Megan C :

You could just input it into your tax return

Customer:

I see, but if I need audited financial statements, would the CPA go off my Schedule C?

Megan C :

They will go against your books, and for GAAP you don't deduct mileage. It's a tax deduction

Customer:

Okay, so the only thing I would enter into Xero are what I invoice my client. My expenses are all down on a business credit card. So I would enter bills charged to the credit card > then payment for the business credit card?

Megan C :

Yes, that is correct.

Customer:

Then of course, my owner's withdrawal to pay myself and that is income I would be taxed on?

Megan C :

Your owner withdrawal will not be tax. Only net income is taxed.

Customer:

Am I taxed for any income that stays in the business account?

Customer:

Net Income = Gross minus Expenses (including mileage)?

Megan C :

Yes, you are taxed on the income your business generates even if you keep it in the bank account

Megan C :

yes, that would be correct

Customer:

Hmm...maybe I'm doing the accounting wrong. I keep 35% of my gross income in the bank account. I estimated 20% is paid to IRS and the state for self-employment/withholding.

Customer:

So the remaining 15% I am taxed on unless I withdraw?

Megan C :

No, you're taxed on all your net income.

Customer:

Oh so what is on Schedule C, then?

Megan C :

Yes, that is correct.

Customer:

the net is taxed at the 20% (or estimated)

Megan C :

Yes, that is correct

Customer:

And if I overpay, do I get that back on my personal return since Schedule C is on my personal?

Megan C :

Yes, you would get a refund of any tax you overpaid

Customer:

Got it. Okay, thanks again for all of your help. And sorry for all of the questions!

Megan C :

No do not apologize for your questions. That's what I'm here for

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 15480
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Finance Specialists are ready to help you
Expert:  Megan C replied 11 months ago.
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Megan C
Megan C
Financial Professional
15480 Satisfied Customers
Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level