Yes, you can reimburse yourself, but the method matters

You can take money out of your business checking account for personal expenses you paid for with your own money, but how you do it affects your taxes and your records. The most common methods are writing yourself a check, transferring funds to your personal account, or taking cash — each one leaves a different trail for your accountant or the IRS to follow.

The key rule is this: your business must have a real record of what you paid for and why. A vague withdrawal with no explanation creates problems later. Banks don't care about the reason — they'll process any withdrawal — but the IRS does, and so will your accountant when tax time comes.

Key Takeaways

  • Reimbursements work best when you have a receipt or invoice showing what you paid for and the date you paid it.
  • Write a check to yourself or transfer funds to your personal account, and keep records showing the business purpose of the expense.
  • Some expenses (like office supplies or mileage) can be deducted from your business taxes if they're legitimate business costs.
  • Personal withdrawals that aren't reimbursements for business expenses should be recorded as owner draws, not business expenses.
  • Your accountant needs to see the original receipt, not just the reimbursement, to properly record the transaction.

The difference between a reimbursement and a personal withdrawal

A reimbursement means you paid for something the business needed, and now the business is paying you back. A personal withdrawal (also called an owner draw) means you're taking money out for yourself, with no business expense behind it. Banks treat them the same way, but your taxes don't.

If you bought office supplies with your personal credit card and the business reimburses you, that's a reimbursement. If you withdraw $500 to pay your personal rent, that's a draw. The difference matters because reimbursements can reduce your business taxes, while draws cannot.

Many small business owners mix these up, which creates confusion during tax season. Your accountant will ask you to separate them, so it's easier to keep them straight from the start.

How to process a reimbursement step by step

Step 1: Gather the receipt. Find the original receipt or invoice showing what you bought, when you bought it, and how much you paid. A credit card statement alone isn't enough — you need the actual receipt that shows what the purchase was for.

Step 2: Write a check to yourself or transfer the funds. Write a check from the business account payable to your name, or transfer the amount to your personal account. Include a note on the check or in the transfer description that says "Reimbursement for [item]" — for example, "Reimbursement for office supplies" or "Reimbursement for client meeting lunch."

Step 3: Keep the receipt with the check or transfer record. File the original receipt together with a copy of the check or transfer confirmation. Your accountant will need both to verify the expense.

Step 4: Tell your accountant. When you meet with your accountant or prepare your taxes, give them a list of all reimbursements with the receipts attached. They will record these as business expenses, which can lower your taxable income.

What expenses the business can actually reimburse

Not every personal expense becomes a business reimbursement just because you paid for it. The IRS has rules about what counts as a legitimate business expense. Common ones include office supplies, equipment, mileage to client meetings, meals during business travel, and professional services like accounting or legal fees.

Personal expenses — like your salary, rent on your home, groceries, or car insurance — cannot be reimbursed as business expenses. If you need money for those, you take an owner draw instead, which is a personal withdrawal that doesn't reduce your business taxes.

The test is usually: would the business have this expense if it didn't exist? If yes, it's likely reimbursable. If no, it's personal.

Why your bank records and receipts matter

Your business checking account is a record. Every check you write and every transfer you make shows up on your statement. If you write yourself a check for $200 with no note, your accountant has to guess what it was for. If the IRS ever audits your business, they'll ask for proof that the expense was real and business-related.

A receipt proves you actually spent the money. A bank statement alone doesn't — it only shows money moved. Keep receipts for at least three years, organized by month or category. Many small business owners use a folder, a spreadsheet, or accounting software to track them.

If you can't find a receipt, you can sometimes use a credit card statement or a bank statement as backup, but it's weaker proof. The original receipt is always best.

Reimbursements versus salary and owner draws

There are three ways to get money out of your business: reimbursements, salary, and owner draws. They're taxed differently and recorded differently.

A reimbursement pays you back for a business expense you covered. It reduces the business's taxable income and doesn't count as income to you (because you already spent the money). A salary is money you pay yourself as an employee, which is taxed as income and has payroll taxes withheld. An owner draw is a personal withdrawal that doesn't reduce business taxes and isn't a business expense.

If you're a sole proprietor or run an LLC, you probably use draws and reimbursements. If you're incorporated, you likely pay yourself a salary. Your accountant can tell you which method works best for your business structure.

Common mistakes to avoid

The biggest mistake is not keeping receipts. Without them, you can't prove the expense was real, and your accountant may not be able to record it as a deduction. The second mistake is mixing personal and business expenses — for example, buying groceries and office supplies on the same receipt and trying to reimburse the whole thing. Separate them out so the business only reimburses the office supplies.

A third mistake is waiting months to process reimbursements. The longer you wait, the harder it is to remember what the expense was for and the easier it is to lose the receipt. Process them within a week or two while the details are fresh.

Finally, don't assume every expense is reimbursable. If you're unsure whether something counts as a business expense, ask your accountant before you reimburse yourself. It's easier to get it right the first time than to fix it during tax season.

Frequently Asked Questions

Do I need to report reimbursements to the IRS?

Your accountant reports the business expense itself, not the reimbursement. So if you bought $200 in office supplies and the business reimbursed you, your accountant reports the $200 office supply expense. You don't file a separate form for the reimbursement.

What if I don't have a receipt for a reimbursement?

Without a receipt, it's hard to prove the expense was real. You can sometimes use a credit card or bank statement as backup, but the IRS prefers the original receipt. If you can't find it, ask your accountant whether they can record it anyway — they may ask you to sign a statement saying the expense happened.

Can I reimburse myself for mileage to client meetings?

Yes, if you drove for a business purpose. You can either reimburse yourself the actual cost of gas and wear-and-tear, or use the IRS mileage rate, which changes each year. Keep a log of the dates, destinations, and business purpose of each trip. Your accountant can tell you which method saves more on your taxes.

Is there a limit to how much I can reimburse myself?

There's no dollar limit on reimbursements, but the expense has to be real and business-related. You can't reimburse yourself for personal expenses just to move money around. If you reimburse yourself for something that isn't a legitimate business cost, the IRS may disallow it and charge you penalties.

Should I write a check to myself or transfer the money?

Either method works. A check leaves a clear paper trail and is easier to match to your bank statement. A transfer is faster and also shows up on your statement. Pick whichever is easier for you, and make sure to note the business purpose in the memo line or transfer description.