Forums: Discussions for entrepreneurs and small business.

Hi,

I have been working on my online business idea for about 6 months and have spent about $1500 building the web application (all in cash and from my personal account). I just setup an S-Corp (another few hundred bucks) and want to start separating business expenses (I have no employees, just hire contractors). My questions are:

1. Considering that the business may not make money and may be a cost center for a while, should I open a bank account for the corporation?
2. How should I pay for future business expenses? For eg: if I have to pay someone $500 for IT work, should I have them invoice the corporation and then pay from my personal account?
3. I`ve heard good things about the Amex credit card for small businesses. Any thoughts about that?

Thanks, this is a great forum.

Cheers

Since you incorporated you are no longer allowed to pay for business expenses from your personal account, unless of course when you organized you also indicated that the corporation would reimburse you for such expenses.  Your corporation should have a checking account and the initial deposit into this checking account should agree with the amount you paid for the stock in the corporation.  This checking account should be used to pay all corporate expenses.

The cost of incorporating and any expenses you had prior to incorporating are usually indicated on your incorporation paperwork as capital or loans to shareholders.  Any additional monies that the corporation may need in order to run the business can be funded via loans to the corporation or additional paid in capital.  Loans must have appropriate documentation including set interest rate and payback charges.

I`ve heard the Amex credit card is good too, but I don`t have one.





-------------------------

Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com

I agree with Gina. Be careful, sometimes things can be later scrutinized and found to be a problem.
I founded a non profit organization and I initially funded it myself because I hated to ask for money. I made baskets for the care giver of those who were taking care of their terminally ill loved ones. Eventually, I had to ask my family and friends to help as the demand for baskets grew. Thankfully, we have the reimbursement clause in our by laws or else it could be deemed illegal if at some point we have to make reimbursements.

All in all - be very careful.



-------------------------

Take each day, mold it and make it yours.......

http://www.solutionshealthnwellness.com