Does paying off a business credit card that you also use for personal expenses improve your personal credit?
You can safely ignore anybody that talks about legality.First of all, though most small business credit cards do not report to you personal credit reports, there are some that most definitely do. Capital One business cards do report every month to your personal credit reports. IIRC, so does Bank of America. If you post which bank issues your card, I can tell you whether it reports or not.The idea that using your business card for personal purchases or vice versa is illegal is more than laughable. Nothing could be further from the truth. Worst case scenario by far is that it can make filing your income tax returns slightly more complicated. Instead of relying exclusively on your monthly billing statements to determine what are business vs. personal expenses, keeping separate records will solve virtually all your problems … if you even have to file a business tax return.So, to answer your question, if your business card reports to your personal credit file, yes, it will help improve your personal credit.
Why can you not deduct your business expenses with a personal credit card?
You can certainly use your personal credit card to pay for business expenses. When you get your statement, you should circle the business expenses so that you will remember them for tax purposes.I prefer to use one particular credit card for business expenses. It just makes thing easier having all the charges on one credit card purposed for your company.If you’ve paid interest, you can legitimately claim the interest paid out during the course of the year. I keep the 12 statements for the year so it’s simple to add up.
Can I still deduct expenses paid for on my personal credit card for my LLC?
There are two kinds of expenses that are typical with a new business, and generally they are incurred before the business has a formalized accounting system. These are “organization expenses” and “start up expenses.” Organization expenses are all the legal costs of forming a LLC or corporation, licenses to open a business, etc. Start up expenses are all the operating expenses incurred before the business is open for business. They are each treated the same.Start up expenses and organization expenses can each be deducted up to $ 5,000 in the year the business “opens for business.” The balance must be amortized over 15 years. The timing, and who has paid the expenses makes things complex.Start up expenses and organization expenses are sort of strange… you accumulate them, and don’t deduct them until you are “open for business.” If you were in business in 2015, then you can deduct them in 2015. If you weren’t open for business until 2016, you deduct them in 2016. If you have already filed the business tax return, it can be amended. The balance of the expenses (over the $5000) are amortized over 15 years. Note that these expenses are deducted on the business return, not your personal return.If you paid for the expenses personally, this is not a problem. You must make an accounting entry to reflect that you made a capital contribution to the business. It’s Debit Start Up Expense, Credit Equity. Easy to do! Be sure you have documented all these expenses. ( remember that if you act like you will be audited and have all the documentation, chances are you won’t be…it’s a Karma thing).We have some great informational courses on start up and business expenses on CEAnow.org.
What if I accidentally use my business credit card for a personal purchase?
[This answer assumes the type of business credit card you’re referring to is where the business is responsible for the charges and not a company-sponsored credit card, where you are personally responsible for paying the bill.]You write a check in the amount of your personal purchase to the company to reimburse them.In most cases, your credit card purchases for the period will be approved by your supervisor or manager. You should make a notation on the receipts or statement highlighting the accidental use of your business card for personal reasons.When accounts payable processes the transaction, the highlighted transaction will be booked to an accounts receivable account (meaning, the company is expecting the money from you).Your check will settle and clear the outstanding receivable.Don’t worry about getting into trouble over this. It happens all the time. You do want to be up front about acknowledging this transaction to the company, if you do not wish to be accused of misusing your business credit card.
If an employee uses a company credit card for personal use and offers to pay the charges....?
What is normal? She pays the company back and promises never to do it again. If she's lucky, she isn't fired. If it happens again, she is. If she doesn't pay, she can be sued for recovery. (A few companies will add the money to income to get it off of their books.) Not every firm works the same way. I worked for a company who set up the Amex accounts differently. Instead of the company paying the bill and then verifying that the expenses were legitimate (and then asking employees to pay them back), the company had Amex bill the employee. The employee would have a huge incentive to turn their expenses in as soon as they incurred them because it was their SSN/credit history at stake. (I always paid my Amex bill on time, but was often waiting 2-4 weeks for the reimbursement to come through.) This reduced the ability of a rogue employee to enrich themselves, but it still caused problems. Let's say the employee used the card at "Condoms to Go" or "The Gentleman's Club." Every time someone in Acounting ran a report, these would show up under other charges. Since Accounting was expecting to see Holiday Inn, Alamo Rental Car, American Airlines and Boston Market, these stuck out like a sore thumb.
Is it illegal or some type of fraud to use business credit cards for personal use?
I wouldn't worry about it. As long as you make the payments it really doesn't matter what you use the cards for. Fraud is extremely difficult to prove to begin with, so imagine a credit card company trying to prove what you purchase is not related to your business. Its not going to happen. With a small business, to some degree, everything is business. Buy what you want, make your payments = no problems whatsoever.
Are merchants allowed to swipe their personal credit card in their POS machine instead of withdrawing money from the credit card at an ATM?
They could technically do that on a cash sale, and pocket the cash from the sale, effectively withdrawing money (debit card), or cash advance (credit card). The merchant does incur a small transaction fee (about 2% for doing this). In the case of credit cards, it could be benificial to do this if they were short cash that month for personal expenses, and needed a short term cash advance since banks typically charge 3% fee for cash advances and charge a very high apr from the date of the advance, versus no interest as long as the bill gets paid in full.Now if an employee of the establishment tries this and is caught, he runs the risk of getting fired since this costs the business the small transaction fee. For example, a waiter/waitress swipes his sky miles/cash back points credit card every time a table pays cash for their meal in order to get points. I actually used to do this (I'm a career server), and although I didn't get fired over it, I got written up with a stern warning to never do it again.So short answer is yes, and it's perfectly legal as far as I know, but may not be a good idea, in some cases.
What happens if someone uses their company's credit card for their own personal use?
Company credit cards are for company expenses. Period. Full stop.My last full time job, I was working for a small technology company as their bookkeeper. One of the things I did for them that I am sure my financially conservative German boss appreciated was requiring our employees who had company cards to sign a card agreement, an agreement I drafted.The most important condition was the company’s right to deduct any undocumented or unauthorized/personal expenses appearing on their assigned card from their pay check. This got their attention pronto.