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Personal Expenses On Business Credit Card
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Best Practices For Separating Personal And Business Finances
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Key Benefits Of Business Expense Cards (p Card) Integration With Expense Management Software
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Business credit cards are a great tool for dealing with all the fixed costs of running a business: materials to buy, vendors to pay, and operating expenses to cover.
Expenses You Should Never Charge On A Business Credit Card
Sometimes the lines between business and personal life can blur in the effort to take care of things. So what if you take care of personal purchases on your business credit card?
Technically, it’s not illegal to put your personal purchases on your business credit card. But making personal purchases on a business credit card can violate the terms of your card agreement, which can have serious consequences. As a general rule, it’s best to keep personal and business expenses separate.
Here’s what you need to know about personal business credit card payments and what to do if you accidentally charge your business card for non-business purchases.
Getting a business credit card is often easier than getting a consumer credit card. Even if your business is not yet registered or fully operational, you may still be approved for a business credit card. It can be tempting to use a business credit card for all your expenses. However, it is important that you only pay business expenses on a business credit card.
Do I Really Need Separate Credit Cards For My Business And Personal Expenses?
Combining personal and business expenses complicates your expenses on several levels. As well as bookkeeping, you will get funding to help your business grow and keep the water flowing if you are trying to build business credit. In addition, using a business card for personal expenses can cause problems with your account, as well as negatively impact your ability to obtain credit in the future.
Once you are approved for a business credit card, you agree to the terms and conditions of using your account. “Most business credit card issuers make you sign an agreement not to use your business card for personal expenses,” says Mike Pearson, founder of Credit Takeoff. “And if you breach the terms of your contract, they have the right to cancel your card.”
If a card issuer notices patterns in your spending outside of your normal business expenses, it may raise a red flag. When you use your business credit card for personal expenses, you are violating the terms of the card agreement, and that is one reason to close your account.
If your personal and business finances are combined, you may be personally liable for business debts if your business has a legal problem. “Commingling your personal and business assets is dangerous because it allows the courts to break the corporate veil and hold you personally liable for business obligations,” says credit industry analyst Greg Mahnken.
Can You Put Business Expenses On Personal Credit Cards?
Most credit card issuers require you to sign a personal guarantee before accepting a business credit card. Thanks to this guarantee, says Mahnken, “you’re almost legally responsible for the balance on your business credit card, so paying large personal purchases on a business credit card carries the same risk as paying large business expenses construction.”
When you use a business credit card, you may lose protection on certain purchases if you used a personal credit card. This is because business credit cards are not governed by the same laws as consumer credit cards. Many protections under the CARD Act do not apply to business credit cards. This protection includes:
Another problem when shopping with a business credit card is that you have less time and difficulty negotiating costs. You also have less protection from how debt collectors choose to collect.
You may be tempted to use your business credit card for personal purchases to help build your consumer credit score. While this may seem like a good idea on the surface, it probably won’t yield the results you’re looking for. This is because most business credit cards only report to the business credit bureaus. Improving your business credit score will not affect your consumer credit.
Monthly Expenses To Put On Your Credit Card
However, if you charge your personal expenses to your business credit card and are unable to pay them, you may find that your personal credit card is in default. This is because of the personal guarantee you sign before you get your business credit card. “If you don’t have money
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