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Business credit cards vs. personal credit cards

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Business credit cards vs. personal credit cards

Should small business owners consider using personal credit cards instead of business credit cards?

Credit card offers can be made for your personal or business use, and generally, the twain shouldn’t meet. And while you may be personally liable for debt incurred on a business card, if you receive a credit card offer for your personal use and you decide to use it for your business, you could be flirting with disaster.

Because of the Credit CARD Act of 2009’s exclusion of business credit cards in its revisions, many business owners are using personal credit cards for their business as a means of taking advantage of the CARD Act instead of waiting for business regulations to be completed.

There are two major reasons why this should not be done:

1. Business credit is used to help your business produce revenue.

It is important that you track expenses and costs when you use credit to run your business. Doing so allows you to set price points on your products and services that ensure profitability rather than loss.

When you use a personal credit card for business expenses, you run the risk of having a confusing statement that makes it almost impossible to determine which fees and interest you are paying as a business epxense and which you are paying for your personal purchases.

2. Business expenses can be deducted.

In order to keep your accountant and the IRS happy, there should be a very firm division between your personal finances and assets and your business finances and assets.

When you use personal credit for business transactions, you blur this line and could run into major problems when trying to declare business expenses.

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