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Steve B
09-17-2008, 04:57 AM
I operate two businesses out of my home. Next week I'm installing a home security system. Obviously, it's a benefit for us personally as well as for the business. Is the cost deductible based on the same percentage that we deduct the rest of our home expenses? Or, can this be viewed as being 100% for the business.

Should I pay for it from the personal account or the business account?

BillR
09-17-2008, 04:01 PM
That one has "check with your CPA" written all over it.

I'd expense it.

Evan
09-18-2008, 12:13 AM
It depends.

Your deduction would certainly be limited to the portion of business use. That is NOT 100%. If you have inventory in a specific room, or an office where things are stored, you could certainly justify a percentage of the cost.

As your situation can be unique, I'd discuss it with your tax preparer. Perhaps classify that in the account "Talk to Accountant".

Regarding whether to issue a check from the business, it depends on how you're taxed. If it's as a sole proprietorship, go ahead. The non-deductible portion is going to be taxed anyways, and you're entitled to withdrawals. If it's a corporation (or S-Corp), it becomes more tricky as it IS a seperate entity that you should repay back the money or to consider it a dividend/distributions, or throw it in with any wages you have.

Evan
09-21-2008, 08:22 PM
What did you end up doing?

Steve B
09-21-2008, 08:37 PM
It's being installed tomorrow. My accountant confirmed my suspicion that it will be split based on the percentage of the home that is utilized for business. I forget what the percentage is - but, it's probably easy enough to find if I look at our tax records.

I guess since the majority is for personal use - I'll pay for it from the personal checking account - then figure out a way take the appropriate deduction for business expenses. We are an LLC if that helps.

Evan
09-21-2008, 09:47 PM
LLCs mean nothing to a tax preparer, it's how you're taxed.

The percentage will probably be based on the size of your work area (office, any storage areas for inventory, etc.) within your home.