“Bank statement loan program?” Set up accounts?

[HopeMission]

Well tomorrow is New Years and my wife said my resolution should be to “Stop Co-Mingling!” 

In other words, she wants me to open a new checking account and designate it as being strictly “Personal” and designate my existing checking account as “Business” only.

Ive been co-mingling as a sole proprietor for over 15 years of business with no prob. Id like to buy an income property as “a married man Sole Separate Property”

Id still like to continue utilizing my credit cards so I was thinking of keeping them all for business except my Quicksilver which I will designate as personal only.

Am I on the right track? Sorry this is so long. Thank you for any help as I am full of hope for this new 2017 but need to get on the right track.

Im planning on paying all my business cards with my business checking and visa versa with the personal. I have ~20K cash that I would like to trickle in each months with my deposits into my business checking. This should be a good year so I am planning on just maintaing a few thousand in my business checking and transferring all the exce$$ over to my personal.

Again all business expenses like supplies, advertising will go through the business cards. Business cards will be paid by income from my business checking.

All personal expenses like rent, food, cable, gasoline will go to my personal card. Personal card will be paid from money saved in my personal checking via overflow from my business check.

Is it really this simple?

I have a home-based business. Is it ok just to keep rent, electricity, and gasoline on my personal side even through a lot of those things are for business?

When preparing myself for a “Bank Statement Loan” would it be good to Inc. or LLC my business. I see no reason to pay 800/year and extra money for tax preparation to incorporate UNLESS it helps me get a better loan.

Last question. I want to buy the income property in my name only since my wife has stopped paying her school loans. Marriage is on the rocks (nothing to do with my co mingling J)and I don’t know what going to happen to her. Would this be a good reason to incorporate the business as it relates to loan people finding out she owes over 100K here in California.

[Revelate]

Requested this be moved to business but a couple of things.

Depending what you do LLC has a number of advantages, and if you're trying to get setup as an independent entity you're stuck paying that awkward Cali fee (knew you were out here soon as I read that haha).  People should run it like a business but a Sole Prop isn't really a business so, well yeah.

I would decide first if you are incorporating or not, since if you are it's flatly new accounts for everything, nothing of your current credit file should get mixed there: invest cash and assets, not your personal credit as you're just begging to smoke your legal protection in my estimation.  Separate and new tradelines, seperate and new business focused credit cards, etc.

If you're just splitting and staying as SP, I'd still setup new business cards personally; some people will decry don't PG anything but meh, it's kind of the only game in town for business credit cards until your company is no joke, and is a less time intensive method to getting business credit up and running.  Usually the business cards have a different rewards package which may well be more appropriate for what you're trying to do... also it's likely easier to claim the deduction if questions are asked: if it looks and quacks like a duck, it's probably a duck and same holds true for a SP when defending things from the IRS; look like a business and act like it and don't conflate personal and business expenses at all.

[HopeMission]

Still another 2-3 years before I apply for “Bank Statement Loan.” For me, I think the only advantage of paying extra for LLC will be that lenders will know the future home is protected from business. With that said I think ill pay the 800 a few months before applying.

In March should I pay my tax guy twice as much to file two separate forms? One personal one for business?

Again my on and off again wife has defaulted on 100K school loan. I don’t want any future judgment coming after my house that will be purchased as “A married man sole separate property.”

For now, I think I should just keep the business checking and all the business cards and open a new personal checking and just associate my personal Quicksilver card with it.

Am I on the right track for buying in 2-3 years?

I’m a sole proprietor and have a home-based business. Is it ok just to keep rent, electricity, and gasoline on my personal side even through a lot of those things are for business?

[Revelate]

You really should likely talk to a professional.

If you're SP everything's rolling up on Schedule C anyway.  There are limits as to what you can deduct if you're running out of the house, and there are very explicit requirements too from the IRS as to what's fair and foul.  There's no corporate veil as a SP, go do whatever you want though I strongly encourage you to look as much like a real business as possible.  

Your LLC formation before the house, if you need to be a seperate entity because you're worried about issues attaching to the house, just pay the darned $800 bucks or move to a different state if you're running the business out of your house.  Trying to save some money is laudable, but we're talking not much if you are running your livelihood on something that may put your financial life at risk via lawsuit or whatever.  Consider it insurance.

If you don't need the protections for whatever you're doing fine, stay SP and be happy do whatever you wish; if you need to be an LLC in 2-3 years I'd go do it right now because corporate history counts... lawyers and judges aren't dumb, half-assed last minute LLC setup to try to shield something, good luck.  Practice what you preach starting now and it'll likely be a whole lot better.

My thoughts anyway, again consider seeing a professional which I am not.

[HopeMission]

Moving on from the pros and cons of getting an LLC or Inc. for a moment-- I want to focus on how to get my current cards and accounts in order.

My question about rent, electricity and gasoline was not about how to list them on my Schedule C but what card to put them on as a sole proprietor. Seems like I should just put things like rent, electricity and gasoline on the personal card even though some of these things can be written off the taxes as business expenses.

Purchases for business supplies, advertising and capital would naturally go on the business cards.

Sound good?

I want to first focus on getting my expenses separated as I plan on making some calls tomorrow to change names on some of my cards from my business name to my first and last name and vice versa.

I currently have a checking account that has my name and the business on it. I think I like to just keep that account as business and open another one as personal so I can write checks from personal side (rent).

As I have said, (knock on wood) what I have been doing as a sole proprietor has never raised any flags or gotten audited. I just want to be as proactive as possible and get the strongest financial profile ahead of applying for a “Bank Statement Loan” in the future.

Yes, the details regarding the new and ever changing “Bank Statement Loan” will be great to ask a pro in the near future. Just don’t want to get ahead of myself.

Thank you for any help!

[rlx01]

Seek professional tax advice.

[stargazer25]

Obviously seek professional advice, but throwing this out there....

If your marriage is on the rocks, will the wife be willing to sign the form that lets you have sole property ownership? If you are financing on your own and she signs you are in the clear.

[HopeMission]

Yes, the wife knows that the only way we could ever get approved for a loan AND hope to keep the home free from her inevitable judgments for not paying her school loans (Before Marriage)  is to sign and give me the “Married man sole separate property.” Status.

I think its vital to keep our monies separate but also separate my (SP) business from my personal accounts and expenses.

Since I wrote last-- I opened a new “Personal” checking so now I have both personal and business.

All the money I make is through my (SP) business.

I think the plan should be to make all my business deposits into the account designated for business. The personal checking will be paid through the business checking.   The business checking will also pay the personal and business Credit Card bills.

Is this still considered co mingling?

In other words my Quicksilver will only pay for personal stuff but still be linked to my business checking to put money in the Quicksilver. Am I ok?

Some expenses are no brainers. Ie. New pair of shoes would be personal. Advertising would be business. What card do I use for expenses like electricity, gasoline and even rent? I have a home-based business and each of these can be used for both? Should I error on the side of just paying this with personal card and just let my tax guy divide these numbers up on my schedule C.

Again I just want to be proactive and be set up for any future audit and the eventual lender to look at my accounts and taxes in the next 2-3 years.

Im also trying to keep this as easy as possible. Do I need to designate a specific amount (like a paycheck) to come into my personal checking from my business every month? Or can I continue to just transfer electronically like ive been doing for years?

Thank you for any help!

[Anonymous]

Not tax advice..

But create an LLC, get one checking account in its name and only and

[Anonymous]

Separate it from your personal checking. Put personal cards on personal checking account and business cards to be paid by the business checking account. Business expenses go on the business card and personal expenses go on the personal cards.

You should be able to clearly distinguish between assets or liabilities and be able to tell if they fall under business or personal.