Expert: Arthur Naman - 11/14/2011

Question
The company owner gives his elderly mother a weekly gift of $125 and I want to be sure that I am classifying this properly. I currently have it as a gift but I want to be sure in case I need to reclass by year end. It total's to $6,500 annually.  Thanks Much

Answer
This is an owner's expense and should be recorded as such. This is not an expense of the company.

It should be owner's draw or owner's salary or amount due to or from the owner depending on the business structure. It not a "gift" from the business which would be the case if there were some business purpose for making the gift.

The owner may, of course, tell you differently.