Can you pay business expenses with a personal credit card

Thanks for explaining what you're trying to accomplish, @Sandy226.

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Is it illegal to use a personal credit card for business expenses?
Can you make business expenses on personal card?
Do I have to use a business credit card for business expenses?

Allow me to join this conversation and provide more information about recording an expense using your business account.

When you pay expenses using business accounts or funds, you must first record the personal expense using the company's account and then reimburse the company afterwards.

Let me guide you how:

Select the Plus icon (+) on the Toolbar.
Under Vendors, select either Check or Expense.
Select the Payee from the drop-down list.
Specify the Bank Account, Cash Account, or Credit Card with which the purchase was made.
In the Account details section, specify Owner's Equity or Partner's Equity in the Account column.
Enter the Amount of the purchase.
Select Save and close or Save and new.

Please check out the screenshots attached to guide you through the steps:

Once you record the expense, you must reimburse the company for the amount of the purchase.

To do that:

Select the Plus icon (+) on the Toolbar.
Under Other select Bank Deposit.
Specify the Account to which to add the reimbursement, and the Date.
In the Add funds to this deposit section, enter Partner's Equity or Owner's Equity in the Account column.
Specify the Amount of the reimbursement.
Select Save and close or Save and new.

Please see screenshots below:

With these steps, you'll be able to record your expense in QuickBooks Online.

Be sure to let me know how else I can empower you to make QuickBooks work the way your business needs. Thanks for coming to the Community, wishing you continued success.

Finance

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Just because you can use a personal card for business expenses, doesn't mean you should.

Keeping track of expenses across multiple accounts and credit cards can be challenging, so you may find it easier to use a personal card for both personal and business expenses. After all, it's not like either expense type will be declined if you use one for the other.

But is it smart to use a personal card for business expenses?

There are both benefits and drawbacks to using a personal card for business expenses. If you plan to use a personal card, the best way to keep your personal and business finances separate is to dedicate that personal credit card to business transactions only to make tracking easier. Consider the pros and cons of using a personal card for business expenses before your next shopping trip.

While business credit cards may have more perks geared towards business owners, personal cards usually have better terms. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) protects personal credit card owners by requiring written disclosures and limiting fees and excessive interest rates.

Business cards are not subject to the Credit CARD Act and usually have higher fees and interest rates, since both are deductible business expenses. If you want the CARD Act protections, you can use a personal card for business expenses, but keep this card for those expenses only.

If your business is set up as a corporation or LLC, you have certain legal protections granted based on your business structure. However, if you don't keep your business and personal expenses separate, you could reduce or eliminate those legal protections.

If your business defaults or fails and still has debts, your commingled funds could allow the debtor to go after your personal assets to satisfy the debt. This is what it means to "pierce the corporate veil."

Building credit responsibly in your personal life allows you to access the best interest rates and terms on loans and credit cards. The same is true for establishing and building business credit. But if you use a personal card for business expenses, you won't be helping your business credit. This can hurt you if you want to get a business loan for equipment, real estate, or other business needs.

If your business has employees and you give them spending privileges, most business credit cards offer free employee cards. The issuers make it easy to track spending per employee by assigning a different card number to each employee. You can also set spending limits and alerts if needed.

If you use a personal card for business expenses, you won't be able to get employee cards. You can add them as an authorized user, but you can't separate the transactions and you are personally responsible for all purchases, whether or not you authorized them.

Depending on your credit score, you may not qualify for a high enough credit limit to meet your business expense needs. Credit cards made for business usually come with higher credit limits because the bank understands that businesses generally have larger transactions and more volume.

By keeping your personal and business expenses separate, you can control spending limits easier on both accounts. Plus, if you need to make a large business purchase, you don't have to worry that you won't have enough credit to pay for a smaller personal expense. Being responsible with your business credit card can help you build business credit, which can boost your spending power down the road.

If you enjoy earning rewards on your personal credit cards, you will be happy to know you can do the same with business credit cards. Many credit card issuers offer a personal and business credit card version, with the business card offering perks geared specifically to business owners, like:

Airline credit cards
Store credit cards
Gas credit cards
Cash back credit cards

Business credit cards also usually offer higher percentage award categories for common business expenses, like utilities, online advertising, and office supply stores. If you meet the minimum spend requirement for the Chase Ink Business Cash Card, for example, you get a $900 cash back bonus after spending $6,000 in the first 3 months. With Chase's personal credit cards, the sign-up bonus is only $200.

Unlike personal credit cards, most business credit cards don't report to the credit bureaus. This can be a benefit because your business transactions won't affect your personal credit. This is beneficial because:

A late payment won't affect your personal credit.
If you have a high balance on a business credit card, your credit utilization ratio won't be affected.
Your business credit cards won't factor into approval for personal credit cards and loans.
If you are applying for a personal loan, your business card balance won't affect your debt-to-income ratio.

If you personally guarantee the business credit card using your social security number, the bank may report late payments or charge-offs. And while many business credit cards don't report to the credit bureaus, some do, so it may be worth it to find out before applying.

While you can use a personal card for business expenses, it's not advisable unless you are keeping your personal transactions separate. If you prefer the benefits of a personal card, only use that card for business expenses and use your business account to pay the bill. Separating your business and personal finances protects your personal assets and credit score, while also helping you build business credit.

No, it is not illegal to use a personal credit card for business. However, business credit cards offer specific perks and benefits to business owners that personal credit cards do not. And if you use the same card for personal and business expenses, you could open yourself up personally to an audit or be held personally liable for any default, which could negatively affect your credit score.

You can pay business expenses from your personal account, but it's best to keep your personal accounts separate from your business. Commingling personal and business expenses is never recommended, especially if you get audited by the IRS or default on the card terms. If you do, then both your business and personal finances are open to review. Plus, if you deduct business expenses on your taxes, it may not qualify if paid from a personal account.

Yes, depending on the card issuer, you can switch a personal credit card to a business credit card. Closing out a personal credit card could affect your credit score, so weigh your options if you want to close the account after switching to a business credit card. If you plan to transfer a balance, you may be limited because not all business credit cards offer balance transfers.

Editorial standards

Is it illegal to use a personal credit card for business expenses?

Is it illegal to use a personal credit card for business? No, it is not illegal to use a personal credit card for business. However, business credit cards offer specific perks and benefits to business owners that personal credit cards do not.

Can you make business expenses on personal card?

Although you can use a personal credit card for business expenses, that doesn't mean that you should. Many small business owners use their personal and business accounts interchangeably. In most cases, there isn't an issue.

Do I have to use a business credit card for business expenses?

While you can use a personal credit card for business purposes, there are many reasons why a business credit card is better suited for the job. It's especially important to make sure you're separating your business and personal expenses so it's easier to manage your expenses for accounting and tax purposes.