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thinksamantha
February 7, 2025
Question

Client purchased fixed asset with business funds through his personal account

  • February 7, 2025
  • 1 reply
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I have a client that transferred money from his personal account to his business account for 2 vehicle purchases. He purchased these in cash. One is used for work and personal, the other strictly work. He wants to separate his personal taxes from the business. How should we categorize these purchases? Would the company keep the depreciation schedule if he registered both trucks in his personal name? Or is it best to file together to connect the transactions?

    1 reply

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    ElijahStownton
    February 12, 2025

    Hello,

     

    The funds transferred from the personal account to the business account should be recorded as an Owner’s Contribution (Equity Investment) in QuickBooks to properly reflect it as business capital. For the vehicles, the one used exclusively for business should be classified as a Fixed Asset - Vehicle.

     

    The mixed-use vehicle requires a more nuanced approach, only the business-use portion should be recorded as an asset, while the personal portion remains non-deductible.

     

    Regarding depreciation, if the business is the registered owner of the vehicle, it can claim depreciation on the business-use portion. However, if the vehicles are registered under the owner’s personal name, depreciation may need to be handled on personal tax returns rather than the company’s financials. The specific treatment may also depend on the business structure (LLC, S-Corp, etc.).

     

    I’d strongly recommend consulting with a tax professional who can guide you based on your specific business setup and local tax regulations.

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