Mixed purchases benefit both your business and personal life. Rent for your home and gas for your car are common examples. An Accountable Plan allows S Corp owners to pay for mixed purchases with personal funds and reimburse themselves for the business portion. This makes it appear as an expense on your Profit and Loss report. The general steps are:

  1. pay for mixed purchases with personal money

  2. calculate the business portion

  3. transferring money from your business checking to your personal checking

  4. categorizing it in QuickBooks Online as "Employee Reimbursement"

Common Examples

Home Renters

Divide the square footage of your home office by the total square footage of your home. Multiply that percentage by home renting expenses: rent, utilities, renter's insurance, etc.

Home Owners

Divide the square footage of your home office by the total square footage of your home. Multiply that percentage by home owner expenses: property tax, HOA dues, utilities, homeowner's insurance, etc. A mortgage is not an expense, it's paying off a loan, so it can't be included in this process.

Auto Expenses

Don't track gas, maintenance, repair, lease, and loan expenses for your car. Instead, track your business miles driven and multiply by the annual IRS mileage reimbursement rate. Options to track miles are:

  1. Odometer readings on a paper log

  2. QuickBooks online built-in module

  3. Third-party software like Timeero, TripLog Beacon, etc.


These detailed steps and the spreadsheet will walk you through the entire process.

  1. Complete this spreadsheet of expenses every month. Click the link and download a copy to your computer. If you are a google user, click "open with" and select "google sheets". Please don't request edit access.

  2. Complete this pdf once every year.

  3. Save the spreadsheet, along with backup receipts and any documentation associated with the expenses.

  4. Transfer funds from your business checking account to your personal checking account with a check or an online transfer. The transferred amount must match the green box in the worksheet titled "Total Employee Reimbursement Expense". Save a copy of the check or a print-to-pdf of the online transfer as documentation of payment.

  5. In QBO, when the transaction appears on the banking screen, categorize it as "Employee Reimbursement".

  6. Save all documentation for three years.

  7. The IRS wants this process repeated consistently once a month.

Optional Action

Follow steps 1-3 above for a one-time only "catch-up" amount that covers prior months. Do not go beyond the first of this year. Instead of inputting a single month in the "Month" field of the spreadsheet linked above, you will input a range of months instead. For example, if the current month is August, you will input "January - July" in the "Month" field. After filling out the spreadsheet, upload the spreadsheet to slack and tag your accounting advisor. Your accounting advisor will then make a journal entry in QBO to record the "catch-up" amount. Disregard steps 4-5 above.

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