Floating personal expenses through the business means you run a tremendous risk of incurring painful tax liabilities if you don’t come clean with your accountants and separate the expenditures in a way that complies fully with the tax code. This much most business owners know.
But what you may not realize is that any full-service accounting firm worth its salt has a team of financial analysts constantly on the look out for fishy activity, and they have a habit of finding and getting to the bottom of it.
To see how it all goes down, here’s a step-by-step look at an all-too-common case: a married business owner with a well-taken-care-of, pregnant girlfriend on the side—who also happens to be his secretary—running all the associated costs through the company.
