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Should one keep track of office and personal expenses separately? A salaried employee will never get an opportunity to ask such a question because the accounts department in the office performs this task on a full time basis. However, a self employed individual operating out of home may be forced to ask this question and determine whether keeping separate records is advisable or not.
A person running a sole proprietary concern will be using all the money earned from the business towards personal and official expenses. In such a scenario, there is very little distinction between personal and official expenditure. An asset purchased for the office can be used for personal reasons as well.
Printing a school project from an office computer will not be tolerated in a corporate organization. However, allowing your child to take a printout from your office computer is not a big deal if the office and the home belongs to you.
Many persons feel that having multiple records is only going to complicate matters. In any case, the source of income is one and the person authorizing the expenditure is the one earning the money. Considering all this, keeping a general track of official and personal expenditure should suffice.
The solution may be very convenient but is certainly not the best for the long term. As the business expands, the individual will have to keep track of business and official expenses separately. A small business may be required to keep records separately if there is a lot of competition in the field. Leakage of money towards personal expenditure may affect the overall competitiveness of the business in the long run.
