How can I account for Electricity in personal home that is used for business?

Client sometimes runs tools off of home electric for business on their personal electrical bill. Since, it isn’t easy to just track the KWH, would they be able to account for that useage and how?

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  1. 74 Answers

    Hi there are a few ways to account for the utility use of your home for business purposes. The basis of calculating the expense would be the same. You would calculate the pro rata share of the space that is being used for the business. This is calculated by take the square footage of the space used for business purposes and dividing this by the total square footage of the home. For example if the space you are using for business is 500sqft and the total home is 2000 sqft then you would allocate 25% of the monthly utilities to electricity. It would be best to track this monthly. If the client is paying the electric bills monthly from their personal account the entry to record this would be a debit to electricity and a credit to owners equity. If this is purely for tax purposes and not being recorded in an accounting system the client can keep a spreadsheet to track the monthly bill amount multiplied by the prorata share discussed earlier. I hope this helps!

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