This past weekend, Meagan and I went to The Greenbrier in West Virginia. We took to look at the resort as a rehearsal dinner location, a chapel for a wedding venue, and several large, elegant rooms that would be a possible prime reception venues for one of her higher-end brides one day.
The facts:
- We have saved up cash to date in our personal ‘travel’ checking account of $7,850.
- We spent a total of $3,097.83 on room, food, historical tour, spa, etc. Receipt attached.
- We reserved the hotel room and paid for it through Meagan Warren Weddings account. I was thinking of moving money (for the whole amount, or in part) from ‘travel’ over to her business account, but am not sure the best way to handle this expense and would like to discuss. Question: If most travel trips are legit business related, how will we use up the travel fund if paid from her weddings account? Is it okay to reimburse her business account with the saved travel money?
- We took the Tahoe and so there were 317 miles driven one way, 634 driven round trip.
- The place is a highly sought out wedding venue.
- We discussed wedding and event planning services with staff while we were there and received important contact information for Event Services staff.
- We reviewed the inhouse floral and rentals department, including their onsite showroom office and have photos to provide to future brides as examples.
- We witnessed a venue walkthrough of one of the nicest ball rooms happening with a bride as they discussed flowers and an entire table setting.
- We got to experience an event happening for about 40 people in a nice, large room with dining room table and Elvis impersonator entertainment as a party celebrated a 40-year birthday celebration.
- This weekend was also our 15-year wedding anniversary.
- We both enjoyed the spa while we were there and got a 1-hour massage. Bridal parties will most likely be using this same Greenbrier Spa as a treat for their bridal party and groomsmen to enjoy. Now, Meagan can speak to the quality of their service and can provide details from her experience.
- We arrived on Thursday at 4pm for check-in and checked out Sunday morning at 11am
We would like to know about what and how to categorize for this expense, as it was a large one. How to handle the travel fund checking account?
Also, on a different note… Meagan has a big wedding this weekend and plans to pay Maddie after she helps out this weekend. We are going to pay her via 1099. We will deposit the check into Maddie’s Custodial savings account at Carolina Telco. We would like to go ahead and transfer $6000 of that money from her Telco savings account, which has $11,000+ into her Custodial Charles Schwab Roth IRA so that money can go ahead and start working for her. So, she will earn her $12,000 throughout the remainder of the year and that will be deposited into her checking, but we were wanting to go ahead and transfer $6,000 this week, if that is ok, from her savings to her Roth.
Thanks for letting us share these thoughts and questions. Dad used to always say…when you have a question, write a report about it.
/(Sent to tax accountant) 9/21/21
Response from tax accountant 9/22/21
Most importantly, Happy Anniversary!! 15 years is a big deal and I’m glad you were able to celebrate at such a nice place!
(And Matt, your dad would be very proud of the report you drafted for your questions.;>)
Regarding the Greenbrier weekend, I’d like to encourage you to separate out the costs between business expenses (meals, lodging, venue research) and personal (owner’s draw).
Business expenses are as follows:
Parking
2 nights’ room charges, fees, taxes (lodging)
Meagan’s meals (meals-50% deductible)
Spa, fitness, and tour (all categorized as venue research)
Be sure to include the round trip mileage in business miles for the year.
You should put the following things in Owner’s Draw:
Saturday night’s room and fees, Sunday morning’s breakfast ($584.05)
Half of all meals, spa treatment, fitness fee and tour (for Matt’s parts-unless the charges are just for Meagan) ($1,777.14 * 50% = $888.57).
Total of transactions for Owner’s Draw = $584.05+$888.57 = $1,472.62.
I would suggest that you transfer from your travel account $1,472.62 into the MWW business account as an Owner’s Investment/Draw (not revenue). This will offset the personal transactions that you label as Owner’s Draw. Please keep the notes on these transactions should you have to prove your intentions or justify the classifications.
Regarding Maddie’s Roth IRA, as long as Maddie has at least $6,000 of earnings by the end of the year, she can have $6,000 of Roth contributions at any point in the year. If she earns closer to $12,000, then that would be even better for the total amount of income taxes that will be assessed across all family members.
The annual Roth IRA contribution limit is $6,000. However much Maddie contributes to her Roth, she must have at least that much in earned income. If she’s paid $6,000 or more, she can contribute up to but no more than $6,000 into her Roth.
The $12,000 amount is meaningful for a different reason. If she earns as much as $12,000, that would be money that is a business expense/deduction for MWW AND it would be offset on Maddie’s federal and state income tax returns by the standard deduction. That’s $12,000 that would NOT be subject to income taxes. (**It will still be subject to self-employment tax of 15.3% on her federal return. There are no deductions or credits for that. If MWW had NOT paid Maddie, that $12,000 would have been subject to S/E tax on your joint return; it’s just showing up on a different person’s return.)
