Questions about business credit/loss

[lnguyen22]

I started out 2021 with more than 90k in profit. However, that was in my personal investment account. During the process I created a LLC but I did not finish set up my business as Scorp for self employment income and did not have a business investment account yet. I lost it all before year end and spent my business credit up to 7k for personal use. I am in a big mess since I should have saved half of the earnings so I can dig my way out of this. As of today, my business is finished and incorporated as Scorp. My fiscal year ends in 1/2023. I am looking to start all over again and do it right this year and keep personal/business separate cards. I failed last year due to horrible management ... How can I pay my expenses I use on my business card for 2021 or should I file all of it under my business name in 2022? Also, what service should I purchase from turbo tax for my legal tax advice? If any applies, thank you.

[ZoltanB45 · Accepted solution]

 If you're business is investing in stocks, there would be no need for that activity to be in an "S Corporation." 

As far as using the business credit card, for personal use or personal business use (not related to the S Corp), it happens sometimes. You just have to make sure you don't continue doing that. Those purchases you did make  would be considered shareholder distribution on the S Corporation tax return. It is not an expense to the business. If these are expenses related to your personal investment account, you would still be able to record them on your personal tax return. 

You will have to pay down the debt with either business income or personal income. It doesn't make a difference which.

Not sure if you were considering this (when you said you want to start all over), closing this "S Corporation" and opening a new one will not do anything about the debt.  Plus you wont be able to dissolve a business with open debt anyways. 

In a summary, ff the problem was that you didn't open a business account but used the business credit card to pay for expenses on personal account, which are business related, you will be able to write them off on the personal return (as long as they are business expenses).

[lnguyen22]

Thank you very much, this saves me a lot of headache! I am clear on what to do with my personal tax return now. I mean to start over is to not making the same mistake from last year and keep everything clear and tracking them. My thought process was right however I did make many bad mistakes last year. I appreciate this answer!

What service or quick books plan should I use if I have more membership for my investment firm? I am still unclear on how to file taxes on behave of my customers net income. Soon I will have 2 potential customer this year. Thanks.

[DaveF1006]

To find out more information about QuickBooks, please visit the Quick Books site. It has a wealth of information and resources for you to compare plans and design a program that is specific to your needs.