Why an expense became an 'Owner's Draw'
Without backup, a charge can't be claimed as a business expense — here's how to turn it back into a deduction.
Why an expense became an "Owner's Draw"
If we can't substantiate a charge — meaning there's no statement, receipt, or agreement that shows what it was for — we have to record it as an owner's draw rather than a deductible business expense. That protects you in an audit, but it also means you don't get the deduction.
The good news: once you provide backup (a receipt, a statement, or an agreement), we can reclassify it as the business expense it really is.
We're expanding this guide
A fuller explainer is on the way.
What this article will cover
- What "substantiation" means and why it matters
- Common items that land in owner's draw by default
- What backup turns a draw back into a deduction
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