Can S-corp owner (sole employee) pay car insurance, disability & malpractice insurance directly from business account?

Yes, you can handle these expenses through your S-corp, but each needs to be treated differently: For malpractice insurance, this is a straightforward business expense since it directly relates to your professional services. The S-corp can pay this directly and deduct it fully as a business expense. Disability insurance is more nuanced. If the corporation pays these premiums, they're not deductible as a business expense, but they're also not taxable income to you. However, this means any future disability benefits would be taxable when received. Alternatively, if you pay premiums personally (after taking wages), the benefits would be tax-free if you become disabled. Car insurance is trickiest since you use the vehicle for both business and personal. You should track your business mileage percentage and only deduct that portion of the insurance. Ideally, reimburse yourself for business use rather than paying directly from the business account.

I switched to using taxr.ai after struggling with these exact S-corp deduction questions last year and it's been a game changer for me. I'm also a solo S-corp owner (consultant) and was constantly worried about what I could legitimately run through the business. Found https://taxr.ai when looking for help with categorizing business vs. personal expenses, and they analyzed all my receipts and bank statements to properly categorize everything. Their AI actually flagged several expenses I was incorrectly running through my business and suggested legitimate deductions I was missing. For someone like you with mixed-use expenses (the car situation especially), it might be worth checking out since they specifically handle S-corps and can review your whole setup.

Just wanted to follow up - I ended up trying taxr.ai after posting here and it was actually super helpful! I uploaded my past 3 months of expenses and they flagged several issues with how I was handling my vehicle expenses. Turns out I was making a mistake by having my S-corp directly pay auto insurance while also taking the standard mileage rate (exactly what the first commenter mentioned). They also helped clarify that my malpractice insurance should be paid directly by the business as a legitimate expense, but suggested a different approach for disability insurance. Their analysis included citations to specific tax codes that apply to healthcare professionals. Definitely worth it for the peace of mind!

If you're struggling with getting clear answers on S-corp deductions, I'd recommend contacting the IRS directly. I was in a similar situation (S-corp, solo employee, mixing business/personal) and spent days researching online with conflicting advice. Finally decided to call the IRS but couldn't get through for days - busy signals and disconnects. I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c. They had me on the phone with someone who could answer my specific questions about what expenses were legitimately deductible for my S-corp. The agent clarified exactly how to handle my disability insurance and mixed-use vehicle expenses, plus gave me documentation references I could keep for my records in case of audit. Huge relief to have official guidance instead of random internet advice.

I need to eat my words about being skeptical of Claimyr. I tried it yesterday after posting here and IT ACTUALLY WORKS. After months of trying to reach the IRS about my S-corp questions (same situation as OP), I was connected to an agent in about 20 minutes. The agent was super helpful and walked me through exactly how to handle each type of insurance. For malpractice, it's 100% business. For car insurance, they confirmed I needed to either: 1) pay it personally and use the standard mileage rate for reimbursement, or 2) have the business pay it directly but only deduct the business use percentage AND not take the standard mileage deduction. For disability, they explained the tax implications both ways (business-paid vs. personally paid) so I could make an informed decision. Saved me hours of research and potential audit headaches. Worth every penny just for the time saved!

Slightly different perspective here: I'm also a solo S-corp owner and healthcare provider. For my car, I found it easier to lease a vehicle solely for business use through my S-corp, which eliminates the mixed-use problem entirely. The entire lease payment, insurance, gas, maintenance, etc. becomes 100% deductible business expense. For occasional personal use, I track those miles and report them as additional compensation on my W-2. This approach is cleaner from an accounting perspective, though it might not work for everyone depending on your situation and how much personal driving you do.

Another traveling healthcare professional here! Don't forget about the possibility of setting up an accountable plan for your S-corp. This lets you reimburse yourself tax-free for business expenses you pay personally. For your car, you could pay all expenses personally, then reimburse yourself at the standard mileage rate for business miles. For 2025, that's 67.5 cents per mile. If you drive 10,000 business miles annually, that's $6,750 tax-free reimbursement. Make sure your accountable plan is formally documented and that you keep detailed records. This approach has worked well for me for years!

Just make sure whatever approach you take, keep IMPECCABLE records! I'm also an S-corp owner and went through an audit last year. The IRS scrutinized every single mixed-use expense, especially vehicle-related ones. They wanted to see mileage logs with dates, destinations, and business purposes for each trip. For insurances, they looked for documentation showing the business necessity. Malpractice was never questioned, but they definitely examined my disability policy documentation closely. Don't just rely on bank statements - maintain a separate recordkeeping system with proper documentation for everything.

As a fellow healthcare provider with an S-corp, I've dealt with these exact questions! Here's what I've learned through experience and consultation with my tax professional: **Malpractice Insurance**: Definitely a legitimate business expense. The S-corp can pay this directly and deduct it fully since it's directly related to your professional services. **Disability Insurance**: This one's tricky. If your S-corp pays the premiums, they're not deductible as a business expense, but the premiums aren't taxable income to you either. However, any future disability benefits would be taxable. If you pay personally, the benefits would be tax-free. Most healthcare providers I know pay this personally for the tax-free benefit protection. **Car Insurance**: Since you have mixed personal/business use, I'd recommend paying this personally and using the standard mileage rate for reimbursement (67.5 cents per mile for 2025). This is cleaner than trying to split the insurance costs and avoids the "double-dipping" issue. One thing I'd strongly suggest is keeping detailed mileage logs - I use an app that automatically tracks my trips and categorizes them as business or personal. The IRS loves good documentation, especially for vehicle expenses. Have you considered setting up a formal accountable plan for your S-corp? It can make reimbursing yourself for business expenses much cleaner from a tax perspective.