I am the co-principal of a two-person limited liability company (LLC). We each operate out of a home office. Next year I will be filing both the Form 1065 (federal U.S. Return of Partnership Income) and 568 (to state Franchise Tax Board) for our company. Each of us will additionally submit a Schedule K-1 with our individual tax returns. We are careful to never intermingle personal and company funds; all company expenses are paid out of our LLC checking account. We were wondering if there are other LLC owners out there who could tell us how you handle reporting of expenses that cannot be practically paid from our company account: the portion of our rent, utilities, and telephone that are for our home offices and that we pay individually out of our personal accounts each month. How should these expenses be reported for our taxes?
