You can reimburse yourself from your business account, but the method depends on whether you took money out first or are paying yourself back for expenses you covered personally

The two situations are different. If you already withdrew cash or wrote a check to yourself, that's a draw against your ownership stake — it's recorded as a distribution or owner withdrawal, depending on your business structure. If you paid a business expense out of your personal account and now want the business to pay you back, that's a reimbursement, and it follows a different paper trail.

Both are legal. Both need to be recorded in your books so your accountant can sort them correctly at tax time. The difference matters because the IRS treats them differently, and your business structure (sole proprietorship, LLC, S-corp, C-corp) changes how each one shows up on your tax return.

Key Takeaways

  • Money you take out of your business account as an owner is a draw or distribution, not income to you, and must be recorded separately from reimbursements.
  • Money the business owes you for expenses you paid personally is a reimbursement and should be documented with receipts and an invoice or memo before you pay yourself.
  • Sole proprietors and single-member LLCs record draws differently than S-corps and C-corps, so check your business structure before you record the transaction.
  • You need a receipt, invoice, or written record for any reimbursement — the business cannot deduct an expense it reimburses without proof you actually paid it.

Reimbursing yourself for expenses you already paid out of pocket

This is the most common scenario: you bought office supplies, paid a contractor, or covered a client meal with your personal card, and now you want the business to pay you back. The business gets to deduct the expense, and you get your money back — but you need documentation.

Start by gathering the receipt or invoice for the expense. The business cannot deduct it without proof. Then create a simple record: a memo, email, or invoice to yourself that lists the date, the amount, what it was for, and the business purpose. Some owners use a spreadsheet; others write a one-line memo in their accounting software. The format does not matter as long as you can show an auditor that the expense was real and business-related.

Write a check from the business account to yourself, or transfer the money electronically, and note in the memo line or transaction description that it is a reimbursement for [the expense]. Then file the receipt with that record. Your accountant will categorize it as a reimbursement, not income, so it will not show up on your personal tax return as wages or self-employment income.

Taking a draw or distribution from your business account

A draw is money you take out of the business simply because it is yours — you own the business, so you can take money out. This is different from a reimbursement because there is no underlying business expense. You are just moving money from the business account to your personal account.

Sole proprietors and single-member LLC owners record draws in the owner's equity section of their books. S-corps and C-corps call it a distribution. The amount you can take depends on how much profit the business has made and, in some cases, what your operating agreement says. There is no receipt or invoice needed — just a record that you took it out.

Write the check to yourself or transfer the money, and note in the memo that it is an owner draw or distribution. Your accountant will record it against your ownership stake, not as business income. You will not owe self-employment tax on a draw (though you may owe income tax depending on your business structure and total income).

The difference between a draw and a reimbursement in your books

A reimbursement reduces the business's taxable income because it is tied to a deductible expense. The business paid for something, you fronted the money, and now the business is paying you back. Your accountant will record it as an expense in the appropriate category — office supplies, meals and entertainment, contractor fees, whatever it was.

A draw does not reduce taxable income. It is a transfer of profit from the business to you. The business already deducted the expenses that created that profit, so taking a draw does not create a second deduction. If you take a $500 draw, the business's taxable income does not change — you are just moving money that already belongs to you.

This matters at tax time. If you mix the two up, you might claim a deduction you should not have, or miss a deduction you should have taken. Your accountant can sort it out, but it costs time and money. Keep the records separate from the start.

How your business structure affects reimbursements and draws

Sole proprietors record draws in the owner's equity section under "owner draws" or "owner withdrawals." Reimbursements are recorded as expenses in the relevant category. At tax time, draws do not appear on your Schedule C; reimbursements reduce your business income.

Single-member LLCs taxed as sole proprietorships follow the same rules as sole proprietors. If you have elected to be taxed as an S-corp or C-corp, the rules change — see below.

S-corps cannot take draws in the same way. Instead, you take distributions, which must be reasonable in relation to the work you do. If you work in the business, you must pay yourself a reasonable salary first, then take distributions from remaining profit. Reimbursements are still recorded as expenses and reduce taxable income.

C-corps work similarly: you take a salary if you work in the business, then distributions from profit. Reimbursements are expenses. Distributions are taxed differently than in an S-corp, so talk to your accountant about the tax impact.

Recording reimbursements in your accounting software

Most accounting software (QuickBooks, FreshBooks, Wave, Xero) has a way to record owner reimbursements. The exact steps vary, but the idea is the same: you create a check or transfer from the business account to yourself, categorize it as a reimbursement or owner reimbursement, and attach or note the receipt.

Some software lets you create a reimbursement request first, then approve and pay it. This creates a paper trail that is useful if you are audited. Others let you simply categorize a check as a reimbursement after the fact. Either way, the receipt and the record of what it was for must be kept together.

If you use cash-basis accounting (you record income and expenses when money moves), the reimbursement is recorded when you pay yourself. If you use accrual-basis accounting (you record income and expenses when they are earned or incurred), you might record the reimbursement when you paid the original expense, then record the payment to yourself as a reduction in what the business owes you.

What happens if you do not document a reimbursement

Without a receipt or record, the IRS may not allow the business to deduct the expense. If you are audited and cannot show proof that you paid for something business-related, the auditor will disallow the deduction, and you will owe back taxes plus interest and possibly penalties.

You also lose the ability to prove to your accountant that the money you took out was a reimbursement, not a draw. This can create confusion at tax time and make it harder to calculate your actual business income. It also makes it harder to track how much you have actually taken out of the business, which matters if you ever need to know your owner's equity or if you sell the business.

Keep receipts for at least three years. The IRS can audit back three years as a standard rule, and longer if there are red flags. A simple folder or envelope for receipts, or a photo of each receipt uploaded to your accounting software, is enough.

Frequently Asked Questions

Can I reimburse myself for personal expenses the business did not authorize?

You can take the money out, but the business cannot deduct it as an expense. If you paid a personal credit card bill from business funds, that is a draw, not a reimbursement. The business will not get a tax deduction, and you may owe tax on the amount depending on your structure.

Do I need an invoice to reimburse myself?

You need a receipt for the original expense and a record that you are reimbursing yourself for it. An invoice to yourself is not required, but a memo, email, or note in your accounting software that says "reimbursement for [expense] on [date]" is enough. The receipt is what matters.

What if I paid a business expense with a personal credit card instead of cash?

The process is the same. You have a receipt from the vendor, you reimburse yourself from the business account, and you record it as a reimbursement. The fact that you used a credit card does not change anything — the business still gets to deduct the expense, and you get your money back.

Can I reimburse myself for mileage or home office expenses?

Yes, but the rules are different. Mileage is usually claimed as a deduction using the IRS standard mileage rate, not as a reimbursement. Home office is claimed as a deduction on your personal tax return, not the business return. Talk to your accountant about whether these should be recorded as reimbursements or deductions.

What if the business does not have enough money to reimburse me right now?

You can record the reimbursement as money the business owes you (an owner loan or owner's note payable). When the business has cash, you pay yourself back. This keeps the expense deduction in the year you paid it, even if you do not receive the cash until later.