Overview

An Accountable Plan allows S Corps to reimburse their employees (and owners like you that are also employees of the company they own) for business expenses they purchased with their personal funds. It is a fancy phrase for:

  1. tabulate business expenses, like home office and miles driven, purchased using your personal accounts

  2. reimburse yourself by transferring money from your business checking to your personal checking and categorizing it in QBO as "Employee Reimbursement".

Use it for mixed purchases, like rent, where the expense benefits both your business and personal life. The rule for mixed purchases is to run them through personal accounts and use this process below to recognize the business portion of the purchase as an expense on your S Corp's profit & loss report.

If an expense only benefits your business, don't use this process, simply run the purchase through your business checking or credit card accounts.

You don't have to do this process if you feel the juice isn't worth the squeeze. If the work to you isn't worth the expense it can put on your S Corp's profit & loss report, then you can ignore this process.

Click here if you'd like to read the nitty-gritty.

Action

  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 worksheet amount "Total Employee Reimbursement". 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. It is a main feature of the accountable plan that the worksheet and the funds transfer occurs consistently every month. You may repeat steps 1-6 for a one-time only transaction that covers prior months. Go back as far as the 1st of the calendar quarter of your S Corp effective date. Do not go beyond the first of this year. You can find your S Corp effective date on your form 2553 that is in the documents section at app.collective.com. If you don't find it there please slack @karmen on your main slack channel.

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