One of the primary reasons we recommend small-business owners get a business credit card is to separate business expenses from personal ones.
Since business expenses are generally tax-deductible, keeping a wall between personal and business expenses makes it that much easier during tax time — and even more so if the government ever conducts an audit.
Still, things happen. You could pull out the wrong card when making a purchase, or you might decide last minute that you want to extend an upcoming business trip and turn it into a mini vacation (even though you've already booked a hotel stay and flights on your business card).
Here's what you should know about putting personal expenses on business cards.
Is it illegal to put personal expenses on a business credit card?
It's not illegal to use a business credit card for personal expenses — but that doesn't mean it's a good idea. Most credit card issuers don't allow small-business owners to put personal expenses on a business credit card. If you do, you could be breaking the terms of your cardmember agreement, which could have consequences.
What happens if you put personal expenses on a business credit card?
Aside from having to untangle the spending on your business ledger, are there other consequences? Yes. Your issuer could close your account if it sees purchases obviously unrelated to your business, and if that happens, you might lose any points, miles or cash-back rewards you have saved.
While there's no evidence this is widespread, all major business credit card issuers say you should not put personal spending on your business card. They even require you to agree to spend on their for business purposes only.
