Founders ask this all the time in different ways:
“Can my company pay for this?”

Often they’re talking about something personal - rent, meals, travel. The instinct is understandable: at the earliest stages, every dollar counts and the lines between personal and business blur. But the tax code doesn’t think in instincts - it thinks in buckets.

Some expenses are deductible, some are reimbursable, and some just create taxable income if you blur the line. Understanding the difference isn’t about legal precision. It’s about clarity of thought. And clarity of thought makes for fewer nasty surprises when you try to raise money or exit.

Let’s break it down.

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1. Rent: You Can’t Just Rewrite the Rules

If you live where you work - which many founders do - the natural question is whether the company can pay your rent.

The short answer is: not in the straightforward way you’re hoping.

Founders sometimes try two paths:

Path A) Fringe Benefits

Your company could technically cover your rent as a fringe benefit. But the IRS treats that as taxable income to you. In other words, it may solve your cash flow, but it creates compensation that needs to go through payroll - and you pay taxes on it the same way you pay yourself salary.

That’s not a loophole - it’s the IRS assuming the expense is your compensation.

Path B) Home Office Deduction ( Contractors/Pass-Through Entities)

If you’re taxed as a disregarded entity (like a sole proprietor or single-member LLC treated as a contractor), and you use part of your home exclusively and regularly for business, you can deduct that portion of rent under Section 280A.

This isn’t available for most C-Corporations - and even when it is, the rules for exclusive use are strict.

There’s one quirky exception people sometimes cite - the Augusta Rule (Section 280A(g)) - where you can have your company rent your home for bona fide business events for up to 14 days a year. But that’s rarely worth the paperwork for a startup.

The key intuition is this:
Directly paying your personal rent with corporate cash almost always becomes compensation.
Taxable compensation.

2. Meals & Entertainment: The Rules Shift Again in 2026

What anyone who’s built a startup has learned is that tax rules change - and often silently.

For meals and entertainment, the rules for 2026 and beyond make this particularly relevant.

Here’s the simplified view:

Meals With Business Purpose

If you dine with a client, investor, or partner and talk business, the meal is generally 50% deductible.

Meals Provided to Employees

Through 2025, meals like office lunches and snacks could often be 50% deductible. Starting in 2026, those go to 0% deductible unless they fit narrow exceptions.

That means:

• Pizza on a Friday for your team? No deduction.
• Coffee in the break room? No deduction.
• Holiday party or employee picnic open to all? Still deductible (100%) if it meets the rules.

Entertainment

Entertainment expenses (like sporting events or club memberships) remain non-deductible.

The broad logic here is simple: meals connected to bona fide business activity are partially deductible, but perks that look like employee welfare without clear business purpose lose their tax benefit.

3. Travel: When Trips Aren’t Just Trips

Travel is usually deductible, but only in context. If it’s primarily business - say, you’re flying to meet customers - then flights, lodging, and meals on that trip fall under ordinary business deductions (with the meal limits noted above).

If the trip is primarily personal with a sprinkle of business, the IRS sees it the same way. The “primary purpose” test matters.

4. Reimbursements: The Cleanest Path in Most Cases

One way to handle founder expenses - especially in a corporation - is through an accountable plan. This lets the company reimburse employees (including founders) for business expenses with no income to them and with no extra tax burden, as long as properly documented.

An accountable plan is the simplest way to:

• Pay yourself back for business travel
• Cover legitimate meals with business purpose
• Reimburse home office costs where allowed
• Manage other business costs you paid personally

Proper documentation is the guardrail. Without it, everything reverts to compensation.

5. The Mental Model That Saves Founders Trouble Later

Here’s what separates founders who sail through a tax year from those who get audited:

• Rent is personal unless there’s a business purpose and structure - reimbursement or deduction instead of corporate payment.
• Meals need business purpose and documentation to get partial deductions, and some categories go away in 2026.
• Travel is deductible when the trip is legitimately business-focused.
• Reimbursements beat direct payments, as long as they follow rules.
  
  

In practice, this means treating the business and personal life as adjacent but distinct financial worlds - not one slippery intersection.

If you try to blur them without clear guardrails, tax systems treat it as compensation and you pay for the privilege in fees, penalties, and time.

Founders don’t need to become CPAs. They need to think clearly about where an expense fits in the tax categories. When you do that, you don’t just save time - you avoid a slow leak in your company’s financial foundation.

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