Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
This might sound like a strange question, but I plan to use my personal cell phone to take applicant phone calls for the LLC (which I currently do for properties that I own in my name). The bill is in my own name, of course. Is this okay to do? It seems crazy to have two separate cell phones and accounts for this. Also, I'm in the same situation with the portable alarm that I use at both my house and the rentals. Thanks.
You are fine. The biggest concern of an LLC is using the account as your personal piggy bank. I would not be worried about using a cell phone. You can get other numbers, but I would keep it simple and be accessable. You will do more deals!! Good luck! :mrgreen:
Oh and for audit purposes most auditors will accept 50-80% of your cell bill as an expense unless you can justify on a bill by bill basis that your percentage of business use is higher.
There was another thing I wanted to ask about. On another forum someone mentioned that it's okay to pay for an LLC property expense with your own bank account or credit card as long as you make sure to submit an expense report to the LLC and have the personal account paid back by the LLC. Is this commonly done, and is it okay?
There was another thing I wanted to ask about. On another forum someone mentioned that it's okay to pay for an LLC property expense with your own bank account or credit card as long as you make sure to submit an expense report to the LLC and have the personal account paid back by the LLC. Is this commonly done, and is it okay?
This is an acceptable practice when done correctly.
I had to do this a few times when we were setting up our bank accounts. I tracked anything I had to pay for on an expense report as you said. I then paid myself back out of the LLC when everything was set up, and had both myself and my business partner sign that I was repaid and filed the paperwork. In QuickBooks I left a note referencing the paperwork.
^ Thanks James. This is a dumb question, but by "filing the paperwork" do you mean you put something in the corporate binder indicating that you were paid back?
^ Thanks James. This is a dumb question, but by "filing the paperwork" do you mean you put something in the corporate binder indicating that you were paid back?
Correct. We have hardcopy and electronic records. So I scan the signed paperwork, file it electronically and then put it in the appropriate folder in our hardcopy filing system. We like to have both in case something happens and either method is destroyed...a little more work but it makes me feel better about it.
It looks like your documenting all this which is the preferred way to go. Reasonable expenses are allowed. Just don't go overboard loading up the LLC
David makes a good point...this is not the preferred method and is not a viable long term method of running a business. I would recommend only doing this in situations where it is the only option, but if you have to, documentation is key.
Just pay your cell phone bill as you normally would and write off 60-75% of it off as a business expense under the LLC. If you want to save on the paperwork just keep a schedule in excel for all the cell phone bills and cut yourself a reimbursment check at the end of each quarter for whatever % you select as business use. If you stay below 75% claimed as a business expense, you shouldn't flag any auditors. That's what I would do.
K.I.S.S. method is key. Don't overcomplicate things. Focus on building your business and leave the tedious tasks to your bookkeeper or accountant. I've seen a lot of people get so hung up in procedural things that they never get out and complete a deal.
Just pay your cell phone bill as you normally would and write off 60-75% of it off as a business expense under the LLC. If you want to save on the paperwork just keep a schedule in excel for all the cell phone bills and cut yourself a reimbursment check at the end of each quarter for whatever % you select as business use. If you stay below 75% claimed as a business expense, you shouldn't flag any auditors. That's what I would do.
K.I.S.S. method is key. Don't overcomplicate things. Focus on building your business and leave the tedious tasks to your bookkeeper or accountant. I've seen a lot of people get so hung up in procedural things that they never get out and complete a deal.
Good luck!
Thanks Daniel. I am not that worried about the tax part. My concern is doing something wrong that could allow the veil to be pierced. It appears that the expense report solution will work though for things like the phone bill.
It looks like your documenting all this which is the preferred way to go. Reasonable expenses are allowed. Just don't go overboard loading up the LLC
David makes a good point...this is not the preferred method and is not a viable long term method of running a business. I would recommend only doing this in situations where it is the only option, but if you have to, documentation is key.
I was only planning to do this for the tenant credit reports, phone bill and maybe the alarm system bill, because these items are hard/impossible to separate out. Everything else I would pay for strictly with the LLC bank account...does my plan sound safe?
I was only planning to do this for the tenant credit reports, phone bill and maybe the alarm system bill, because these items are hard/impossible to separate out. Everything else I would pay for strictly with the LLC bank account...does my plan sound safe?
Just pay your cell phone bill as you normally would and write off 60-75% of it off as a business expense under the LLC. If you want to save on the paperwork just keep a schedule in excel for all the cell phone bills and cut yourself a reimbursment check at the end of each quarter for whatever % you select as business use. If you stay below 75% claimed as a business expense, you shouldn't flag any auditors. That's what I would do.
K.I.S.S. method is key. Don't overcomplicate things. Focus on building your business and leave the tedious tasks to your bookkeeper or accountant. I've seen a lot of people get so hung up in procedural things that they never get out and complete a deal.
Good luck!
Thanks Daniel. I am not that worried about the tax part. My concern is doing something wrong that could allow the veil to be pierced. It appears that the expense report solution will work though for things like the phone bill.
I'm not a lawyer, but I'm pretty sure the mixing of funds to pierce the veil is about paying for strictly personal things with business money out of the account such as paying your personal mortgage, buying your friends beer, out of the LLC account.
I don't think buying something for the business with personal cash then getting reimbursed for it (if it's a legitimate business purchase) from the LLC is going to run a risk. You may want to double check that with a lawyer.
I don't think buying something for the business with personal cash then getting reimbursed for it (if it's a legitimate business purchase) from the LLC is going to run a risk. You may want to double check that with a lawyer.
I think what is being referenced is the fact that if an LLC is sued, the finances of the LLC will be examined. It is important to keep a separation between personal and business finances or you can lose the protection of the LLC. However, as long as it is not an overly common occurance and is properly documented, you will be ok. Note: I am not an attorney and am speaking on personal experience.
I was only planning to do this for the tenant credit reports, phone bill and maybe the alarm system bill, because these items are hard/impossible to separate out. Everything else I would pay for strictly with the LLC bank account...does my plan sound safe?
What do you mean by difficult to separate out?
The service I use to do credit reports does not have the technical ability to bill to different credit cards for different searches -- so if I do some reports for some houses in LLCs, others that I own in my own name, I have to pay with my own personal credit card. (basically same situation with the phone)
I think what is being referenced is the fact that if an LLC is sued, the finances of the LLC will be examined. It is important to keep a separation between personal and business finances or you can lose the protection of the LLC. However, as long as it is not an overly common occurance and is properly documented, you will be ok. Note: I am not an attorney and am speaking on personal experience.
That is the issue I was addressing.
I'm not an attorney but in my mind I would think that paying for the phone that has a personal use aspect to it from the business would be MORE likely to "pierce the veil" than being reimbursed for the business portion only.
I would think that if you sent an expense reimbursement report (quarterly, annually, whatever) to the LLC for the business portion of the bills and cut a check from the business to you this is no different than any other Accounts Payable bill being paid. With the reimbursement method, no personal activity ever hit the books. Paying for a partially personal use service through the business, however, does have personal use on the books.
Daniel,
I understand what you are saying. I was referencing where you said
"I'm pretty sure the mixing of funds to pierce the veil is about paying for strictly personal things with business money out of the account such as paying your personal mortgage, buying your friends beer, out of the LLC account." I was just reinforcing that it is as "piercing" to pay for business things with personal funds as it is to pay for personal expenses with business funds (unless of course you properly document and pay back).
The service I use to do credit reports does not have the technical ability to bill to different credit cards for different searches -- so if I do some reports for some houses in LLCs, others that I own in my own name, I have to pay with my own personal credit card. (basically same situation with the phone)
That makes perfect sense and I think it would be perfectly acceptable to use the methods we discussed (again, I am not a lawyer). Good luck!
This might sound like a strange question, but I plan to use my personal cell phone to take applicant phone calls for the LLC (which I currently do for properties that I own in my name). The bill is in my own name, of course. Is this okay to do? It seems crazy to have two separate cell phones and accounts for this. Also, I'm in the same situation with the portable alarm that I use at both my house and the rentals. Thanks.
Nope, I didn't read the other posts, LOL.
Absolutely you can use your private phone, just don't try to deduct it as a business expense because you'll never prove to the tax man that it's used exclusively or more for business than for personal use. Same goes for office equipment and furniture.
Now, that goes to any small business. You may need a business license at City Hall, they may want a "business phone number" but that can be a personal phone as well. I've never had a business cell phone, my business lines were land lines in the office.
Not news for techies, but back when, I was excited with call forwarding. I would forward by business lines to my cell phone, I'd be sitting on my boat at the lake answering my cell as the business.....loved it! :)