AccountingBLOCK

I've recently started a business (sole proprietorship) and have set up a separate bank account for tracking the income and expenses of the business. I'm using my personal car in the business, and I estimate that 65% to 75% of my driving will be business-related. As I try to keep records straight, should I pay for all of my gas/fuel purchases out of the business account rather than my personal account? I do realize that as a sole proprietor all the money rec'd in the business is my personal money, but would it be better to pay for things such as fuel from the business account?

Thanks for any advice!

Congratulations on taking the first step towards your dream

It depends on how organized you are. In order to prepare your Schedule C, you will have to be able to provide your total automobile expenses. If it would help you to track them by paying them from your business account, then that's what you probably should do.

Remember to keep track of all business miles and keep all auto expense receipts.

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Zahid H. Lilani

You should also decide on using 'actual expense' or 'standard mileage rate expense'. actual = you deduct gas, repairs, depreciation, etc. (65% in your case). standard = 50.5 cents/mile for 2008, must keep log of miles driven, but then pay all gas, repairs, etc. out of your personal account.

Cy

It does not matter how you pay these expenses as to how you will deduct them on your tax return.