The Easypeasy guide
Personal outlays for ENK – keeping things in order
Paid a sole proprietorship expense with a personal card? Learn to document the purchase, separate personal and business spending and avoid recording expenses twice.
Paid for your business with a personal card?
A personal outlay in this context is a business purchase you paid for with your own money. You need to assess what the purchase is for and how it is documented. The payment card alone does not determine whether it is a business expense.
Keep track of the money you put in and take out. A separate account for business activity makes checking easier. Altinn recommends separating business and personal finances.
How to document a personal outlay
- Keep the invoice or receipt. Check that you have documentation for the purchase, not just a bank statement.
- Describe the business purpose. State which job or part of the business the purchase relates to if this is not clear from the document.
- Record the purchase once. Use the correct date and purchase type. Mark the payment as personal so it is not incorrectly deducted from the business bank account in your books.
- Assess VAT separately. VAT deductions are not automatic. Your registration status, the purpose of the purchase and the documentation must support the deduction.
The Norwegian Tax Administration stresses that costs must be documented and a bank statement alone is not sufficient purchase documentation. Electronic payment is required for a deduction when the expense is NOK 10,000 or more. See the guide to start-up costs.
If you are unsure how the software handles personal payments, get help before recording. Do not select the business bank account simply to move on.
Example: A purchase and a reimbursement
You buy materials for a job
You pay NOK 800 from your personal account for materials used up on a customer job. We assume the entire purchase is for the business, can be expensed and the business is not VAT registered.
Record the NOK 800 purchase with the receipt and personal payment. If you later transfer NOK 800 from the business account to yourself, it is a transfer relating to the money you paid out. It is not a new materials purchase.
A common mistake is expensing both the receipt and the transfer to the personal account. This would put NOK 1,600 of expenses in the accounts, even though the materials cost only NOK 800.
Let the document explain the purchase and the payment entry explain where the money came from. Ask for help with the correct equity entry if you enter account numbers manually.
Personal purchases, mixed use and withdrawals
A personal purchase does not become a business expense because you pay with the business card. A purchase used both personally and for business requires an assessment of the allocation and any special rules. Do not use an arbitrary percentage just to finish the entry.
You cannot be an employee of your own ENK. Money you transfer to yourself is therefore not an employee salary. A withdrawal does not in itself reduce your taxable profit either. Altinn explains the owner's role and tax on profits.
For an overview of documents, banking and reporting, read the guide to accounting for sole proprietorships.
See how accounting can be simpler
Try Easypeasy with example data, or get started with your own sole proprietorship.