Can You Use A Personal Credit Card For Business

Using a personal credit card for business expenses can exist a convenient style to get some extra time to pay off expenses, and tin also make it possible to get rewards and benefits every time yous swipe.

In general, though, it'south always a good idea to use a dissever credit card for business organisation expenses as you do for personal expenses. Hither's why.

Is Information technology Possible to Use a Personal Credit Carte for Business?

The curt answer is yes. It'southward legal to swipe your personal credit card when paying for business concern expenses. Your vendors won't bank check to brand sure you're using a business credit card, and credit card companies usually don't clarify your statements to brand sure y'all're only using the carte du jour for business reasons.

However, we advise against using a personal credit bill of fare for business purposes for a number of reasons — more often than not because there are so many benefits to dividing the 2.

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Benefits of Separating Personal and Business Expenses

Every bit the maxim goes, you shouldn't mix business with pleasure. While that might non be a universal truth, information technology does make sense when it comes to your expenses.

Using a separate credit card for your business and personal expenses is an essential tactic for all small business owners, whether y'all're merely starting out or you've been in business organisation for years. Here are the about important reasons y'all should consider dividing upwardly your expenses.

Tax Prep Will Exist Easier

Tax time is a season most business organisation owners don't wait frontwards to, just you can brand your bookkeeping cleaner by separating business and personal expenses.

As a minor business owner, you're allowed to deduct business expenses on your tax render, as long equally they were incurred for the business. Only if your credit card statement shows both personal and business concern purchases, information technology can be difficult to remember what you lot bought for your business. Keeping all your business charges on their own carte makes it clear what is a tax-deductible business expense and makes revenue enhancement prep that much more than straightforward.

Also, a word of caution: if you make a mistake on your taxation return and get audited by the IRS, you may be on the hook for more than taxes, plus involvement and penalties.

LLCs Go along More than Legal Protection

Being designated an LLC or corporation protects the concern owner's personal assets during a lawsuit. Merely to keep all of those legal protections, it is required that yous separate business and personal expenses. Combining the two can allow attorneys to "pierce the corporate veil," or go after the owners' personal assets, although this usually but happens in misconduct cases.

You'll Stay Compliant

If you're using a business credit card, your card agreement probable states that you hold to use the account for business purposes only. Using the card for personal expenses too is in violation of the agreement and tin can exist grounds for business relationship closure.

That said, it is rare for this to happen. But if you state a few expenses on your credit menu application and then charge much more to the card every month, it could raise some red flags for your carte du jour's issuer.

Financing May Be Easier

Equally you grow your business concern over fourth dimension, you'll probable start looking for other ways to get capital letter for expansion like a business line of credit or a business organization loan. When working with commercial lenders, they typically similar to wait at your bank and credit card statements to see your business transactions, as well as other business finances, to get an thought of how you manage your concern.

If they observe a lot of expenses that seem unrelated to the concern, they may wonder about your ability to manage your business well and consider yous a riskier borrower.

Things to Consider Earlier Using a Personal Credit Carte du jour for Business

In that location are several reasons y'all should consider getting a carve up credit card for your business organization expenses, but it doesn't necessarily have to exist a business credit card.

Personal credit card agreements typically don't have a clause banning you from using the account for business organisation purposes. Also, using a personal credit card gives you access to sure protections that the federal government has yet to extend to business organisation credit cards. The Credit Card Accountability Responsibleness and Disclosure Act (the Credit CARD Human activity) just offers consumer protections. Business organization credit cardholders aren't legally guarded against things like interest rate hikes and outrageous fees.

That said, at that place are a few things to consider before using a personal credit card for your business organisation:

Y'all Won't Build Business Credit

Business credit is the lifeblood of your small business organisation — and you usually have to accept steps to make sure yous're edifice it. One of those steps is opening a business credit carte du jour that reports to the commercial credit reporting agencies. This ways applying for a small-scale business credit card that notifies one or more of the reporting agencies when yous pay your bill on time, besides every bit when you're late. Just similar with personal credit, these payments increase or decrease your business credit score and create a business organization credit history.

Spending on a consumer credit card won't build business credit. And business credit is vital if you want your business to grow. Simply agreement your business credit score increases your chances of financing approval by 41%.

If yous're looking to build business credit, become a business credit card.

You'll Miss Out on Business-Specific Rewards

Like consumer credit cards, business organisation credit cards often have welcome offers. Using a business credit card to pay for your monthly small business expenses can allow yous to reach the spending minimum apace so you can take full advantage of the welcome offering.

Cardholders as well get rewards aimed at business purchases. The exact rewards depend on the card. Just you may see that instead of greenbacks back or points on dining and entertainment, yous'll get rewards back for things like office supplies, net, or advertising — or the things your business needs to thrive. You might as well get rewards for that spending.

Also, some business credit cards offering special perks that make information technology easier to manage your expenses.

Yous'll Probable Go a Smaller Credit Limit

On average, concern credit cards offer higher credit limits than personal credit cards because businesses tend to spend more money than households. By using a personal credit card, you may get stuck with a lower spending limit than you need.

If you don't spend a lot right now, that might not be a problem. But if you do, information technology may be better to look for a business credit card.

Y'all Can't Go Employee Cards

With a business organization credit carte, you can give out company credit cards to your employees that aren't an selection using a personal credit carte. Employee cards can make information technology easier for your staff to buy the products and inventory they need when they need them, and allows y'all to rails the spending in one place. These cards can also simplify the procedure for things like concern travel. Plus, some employees aren't comfortable using their own money for business organisation expenses and submitting them for reimbursement later on.

Well-nigh business credit cards don't charge for additional employee cards. If you are using a personal credit bill of fare for business concern, however, you can add an employee by calculation them as an authorized user on your account. Merely you lot cannot add your business to your personal credit carte du jour equally its own authorized user.

How to Detect the All-time Credit Bill of fare for Your Business

When looking through credit card offers, search for low interest rates, an affordable annual fee, and a rewards program that suits your type of business organisation. Credit card issuers detail their rates and fees on their website.

Nav makes it easy to detect the right business credit card for your business. We gather all of our partner's business credit cards in one identify for you to browse. Sign up for a free account with Nav to get matched automatically to the cards that are all-time suited to your specific needs and qualifications.

The Bottom Line

Separating your business and personal expenses is crucial to smart business direction. But you don't necessarily need to open a new credit card to do information technology. If you lot have more than one personal credit card, y'all could start using 1 for business expenses but.

However, if y'all want to accept reward of the perks that business credit cards have to offer, take some time researching top business credit cards and compare them to discover the best i for your business organisation.