1. Agreed. Company is an S-corp. these expenses are just listed as ops cost or office expenses. We have a separate category for owner draws, but it’s rarely used

  2. Without seeing their year end financials it’s hard to tell. I have a few clients who book all their personal expenses as business throughout the year. Come tax time I go through the general ledger and reclass all those personal expenses as Owners Draws. No matter how much we tell them to stop doing it, they continue. The answer is, it depends.

  3. Yes, this is tax evasion. The owner is reducing taxable income with bogus expenses that are neither necessary nor ordinary.

  4. It’s not tax evasion if the accountants are correctly reclassifying it come tax time, it’s just sloppy accounting. Sloppy accounting at mom and pop firms is very common. It could be tax evasion but there aren’t enough facts to establish that from the post.

Leave a Reply

Your email address will not be published. Required fields are marked *

News Reporter