Hello! I’m a new user and know just enough of double-entry accounting to be dangerous. It’s tax prep time and I have several vehicle-related expenditures from my business bank account that are not deductible as business expenses. I’m a sole proprietor filing taxes in the U.S. on a Schedule C. I was thinking I should go into my bank account detail and just change the Account from ‘Car and Truck Expenses’ to ‘Owner Equity’ and note the event as an owner draw. Would this be OK? I figure this way the expenditure would not show up on the P&L. Thanks for any advice!
That will work from a financial accounting perspective. You have, in effect, had the business pay you a draw by covering vehicle expenses.
But you might be shortchanging yourself from a tax accounting perspective. As you probably know, you can claim standard mileage rate or actual expenses. And even under standard mileage, some specific expenses are deductible in addition, such as interest. IRS rules about vehicle expenses are complex enough to justify consulting an accountant.
Thank you, @Tut, for your quick reply! I have downloaded some tax guides from the IRS in my country and will study them. For now, my out-of-pocket expenditures are “small potatoes”, but I will definitely consider calling on a CPA when my numbers get bigger!