Business Expense Payments

[slemgem1]

Is it legal to direct deposit your payroll check to your business bank account.

What is the documentation process to transfer money to your LLC from your personal bank account.  (i.e loan your business money from your paycheck).

[Jackstar221]

You can deposit it into the business account, but a personal account is suggested, because it is going into your personal account. A W-2 which consists of those deposits, is reported on your personal tax return.

When you transfer money from your personal account to your LLC or your business, it is treated as a contribution, which is an equity transaction. Keep documentation of your general ledger in QuickBooks within your equity account, so whoever prepares your tax return will be able to follow the trail and treat the equity transaction as a contribution for money contributed to the business, and a distribution for money taken out of the business.

[slemgem1]

If I do not have quick books yet, can I list the dates and amounts on an Excel spreadsheet? Does turbo tax allow that?

[VolvoGirl]

You can keep or make your records any way you want outside of Turbo Tax.  What kind of LLC do you have?  If it is a Single Member LLC that is not an S corp it is a disregarded entity and you file it on schedule C in your personal 1040 return as self employment.  

[Jackstar221]

Yes, you would just have to manually enter the expenses into TurboTax.

[VolvoGirl]

If you are filing on Schedule C you can also use Quicken.  It's suppose to import to Turbo Tax.  QuickBooks might have you filling out Owners Draw and other special business categories which you don't use for Schedule C .

[VolvoGirl]

Also if you file on Schedule C you don't need to keep track of personal transfers.  It's all your own money.  You can deposit or pay expenses from any bank account or credit card.  You don't report transfers between bank accounts or make loans to yourself.