Solopreneurs, how to track personal vs professional expenses?

[Baguettestache]

Hello Mustachians,

I'm a web developer doing freelance work in France. I used to have a particular legal status that made it easy to start a company and pay low taxes in the beginning but had a cap on revenues and no deductible expenses, no way to optimize finances. Thus, I used to track pro and perso expenses in the same spreadsheet. It didn't matter that my new computer was for a professional use, I couldn't deduct it from my pro expenses anyway. I used to consider taxes as regular spendings just like food and rent.

Things have changed this year, I switched to a regular company status, I now pay more taxes but I can deduct expenses. I'm still working solo, no employees.

How do you or would you track expenses in this situation? Completely separate?
At the personal level, I'm a Mustachian at heart trying to keep expenses low.
At the professional level, I'm a little more encouraged to spend to grow the company, pay for formations to learn new skills, deduct spendings...

For example: I've been eating out more often lately as I have to travel for work. Not very Mustachian to do but almost necessary for my work and deductible from professional expenses.

The mindset required to reduce personal expenses is a little different than the one required to grow the company and aim to earn more.

Thank you! 🙏

[Metalcat]

I have a separate business account and spread sheets for the business.

[Smokystache]

I have 1 credit card that I use for recurring subscriptions that are business-related (website provider, payment system, video hosting, etc.). And then one CC for all other business expenses (flights, hotels, meals, etc.). This is one are where I don't try to "optimize" my CC points or rewards. Otherwise it will get messy (too messy for me anyway). 2 credit cards takes care of most of this for me.

[Baguettestache]

I have a separate business account and spread sheets for the business.

Do you apply a different approach or mindset to both personal and professional finances? Do you try to keep expenses low in both areas? Do you aim to optimize both?

Thanks @Smokystache!

[Metalcat]

I have a separate business account and spread sheets for the business.

Do you apply a different approach or mindset to both personal and professional finances? Do you try to keep expenses low in both areas? Do you aim to optimize both?

Thanks @Smokystache!

I'm not quite sure I understand what you mean??

Yes, I optimize both, but by "optimize" I mean that I only spend on what adds value to my life.

The business needs to serve my overall quality of life, so at the end of the day, I'll spend on whatever I need to for the business to thrive in a way that overall benefits me.

There are things I will spend on for the business that I wouldn't spend on if I didn't have a business, but that's because having the business fundamentally changes my life overall, which alters the optimization factors sometimes.

[Baguettestache]

I'm not quite sure I understand what you mean??

Yes, I optimize both, but by "optimize" I mean that I only spend on what adds value to my life.

The business needs to serve my overall quality of life, so at the end of the day, I'll spend on whatever I need to for the business to thrive in a way that overall benefits me.

There are things I will spend on for the business that I wouldn't spend on if I didn't have a business, but that's because having the business fundamentally changes my life overall, which alters the optimization factors sometimes.

Thanks! this is the kind of stuff I had in mind.
I'll start tracking the business expenses away from the personal ones from now on and aim to optimize both.

[Malum Prohibitum]

Hello Mustachians,

I'm a web developer doing freelance work in France. I used to have a particular legal status that made it easy to start a company and pay low taxes in the beginning but had a cap on revenues and no deductible expenses, no way to optimize finances. Thus, I used to track pro and perso expenses in the same spreadsheet. It didn't matter that my new computer was for a professional use, I couldn't deduct it from my pro expenses anyway. I used to consider taxes as regular spendings just like food and rent.

Things have changed this year, I switched to a regular company status, I now pay more taxes but I can deduct expenses. I'm still working solo, no employees.

How do you or would you track expenses in this situation? Completely separate?
At the personal level, I'm a Mustachian at heart trying to keep expenses low.
At the professional level, I'm a little more encouraged to spend to grow the company, pay for formations to learn new skills, deduct spendings...

For example: I've been eating out more often lately as I have to travel for work. Not very Mustachian to do but almost necessary for my work and deductible from professional expenses.

The mindset required to reduce personal expenses is a little different than the one required to grow the company and aim to earn more.

Thank you! 🙏

Talk to an accountant in France who knows about the rules there. Most of us are US based.

As for tracking, though, you should have a separate business account.   You pay your payroll and eventually profits out of that account to you, personally, which you deposit in a personal account.  If you use credit, then a credit card that is only for company expenses, not personal.

Separate the company's finances from your personal finances in all respects.

For the more specific things, like purchasing food when traveling for work, in the US the rules might be different than France, and I have no idea, but surely there are French blogs and such from which you can learn the rules.  I find a good accountant worth it in the US.

[sonofsven]

I would try to keep to your mustachian principles with your business spending as much as you can.
It's easy to say "oh, it's a write-off!".
The problem is, you still have to pay for it.

[Baguettestache]

Thank you @Malum Prohibitum! I'll talk to my accountant. I have one but he tends to not say much unless I ask.

I would try to keep to your mustachian principles with your business spending as much as you can.
It's easy to say "oh, it's a write-off!".
The problem is, you still have to pay for it.

True! While I appreciate I can write-off some things I still have to be careful on those spendings

[NorCal]

I'm in a similar situation.  I use accounting software (Freshbooks) to track all of my business income and expenses.

I'm not at the point where it makes sense to have a separate bank account, but I will likely do that if my self employment income continues to grow next year.