Yes, you can use a personal credit card for business expenses, there’s no law saying otherwise. But just because you can, it doesn’t necessarily mean that you should do it.
Why You Shouldn’t Use a Personal Card for Business Expenses
Personal credit cards mostly have lower credit limits. This means you wouldn’t be able to make big purchases. On the other hand, business cards generally have higher limits.
Business cards offer better signup bonuses. And their rewards are tailored to better fit a company’s needs and requirements.
Using a personal credit card to pay for your business’s expenses can create confusion when looking at your monthly statement. For example, it might be hard to spot all the tax-deductible purchases when they are mixed with personal ones.
When it comes to credit scores and credit history, a personal credit card won’t build your business’s credit.
That said, you can certainly use a consumer card for business expenses if you wish. But if you’d rather apply for a card that better suits your company’s spending habits, check out our editor’s latest picks for the best small business credit cards.
Yes, you can redeem business credit card rewards for personal use. However, there are reasons you may not want to. After all, business credit cards are designed with business owners in mind, so the cards’ rewards and benefits are geared more toward business needs than consumer needs.
Business credit card rewards are deductible expenses: Credit card rewards are generally not taxable, but the IRS will expect you to subtract them from your business expenses report. You'll have to consider the rewards as discounts on your business expenses, which will reduce the amount you're able to deduct on your taxes. Plus, if your business is a corporation or an LLC, earning rewards on personal expenses may threaten your liability protections, so your personal assets can be at risk.
How to use your business rewards: Financial professionals don't recommend mixing your business and personal accounts, especially if you are not the only owner of your organization. So, instead of using rewards for personal purposes, you can use them to boost your business, such as funding some of your company’s operations.
How to maximize your rewards: Make sure to analyze your business spending when earning rewards. Then, redeem those rewards wisely. To do so, take into consideration the redemption options, as some may offer more value than others.
It’s also worth keeping in mind that business credit cards are not covered under the CARD Act. So, certain protections like being notified before an interest rate increase do not apply to business credit cardholders. However, many issuers have extended CARD Act protections to include business credit cards. But this is not a legal requirement.
You should get a business credit card if you own a small business and have good or excellent personal credit. Business credit cards are worthwhile for qualified applicants because they offer generous rewards, help separate business and personal expenses, provide high credit limits, and have flexible authorized user policies.
Business credit cards also come with a variety of business-specific benefits and features that can make your life easier and your business better. So, even though many business cards do have annual fees, you’ll more than get your money’s worth if you … read full answerpick the right one.
6 Reasons Why You Should Get a Business Credit Card
Lucrative rewards. Business credit cards are known for great rewards, and some business cards offer bonus earning rates on office supplies and other business-specific expenses. You may also be able to get a bigger initial bonus than with a personal credit card.
Separation of personal and business expenses. By using a business credit card for your work expenses and a separate card for personal spending, you make life much easier for yourself and for your accountant when it’s time to file taxes.
Higher credit limits in many cases. Many business credit cards have higher credit limits than personal credit cards. A higher credit line gives you more purchasing power, which can be especially useful for business funding or unanticipated expenses.
Business-friendly authorized user policies. Many business cards will let you add a lot of employees as authorized users for free. Most will also let you customize spending limits and track the purchase history of each card.
Business and personal credit building. Improving your credit standing can help you get good rates when you apply for loans and lines of credit later on. That said, not all business cards report to all of the business and personal credit bureaus. So, if you want credit history added to both your business and personal credit reports, you should ask the card issuer about which bureaus they report to before applying for a card.
Extra perks to protect purchases. Businesses often spend more than individuals. So, common credit card benefits, such as purchase protection and extended warranty protection, tend to have higher coverage limits on business cards.
Ultimately, you should get a business credit card if you can use the card responsibly. While business cards can be great assets, they can also cost money and lower personal credit scores when used incorrectly. So, try to take advantage of all that business credit cards offer, but be aware of the risks before applying for a card.
The best personal credit card for business expenses is the U.S. Bank Cash+ Visa Signature Card because it has a $0 annual fee and gives 2% - 5% cash back in flexible bonus categories. Cardholders can pick their two favorite categories from the list of options and earn 5% cash back on up to $2,000 spent each quarter. Their next favorite category gets unlimited 2% cash back.… read full answer
One downside: the bonus categories list is subject to change, and cardholders have to sign up for the categories every quarter before the rewards kick in. But a savvy business owner or employee can choose the ones that fit their business best each quarter, and earn 1% cash back on all other purchases. The U.S. Bank Cash+ card’s signup bonus isn’t bad, either: $150 after spending $500 in three months. That dollar amount is just shy of the national average signup bonus, but it’s easier to get than most bonuses, too.
The Capital One Quicksilver Credit Card is another smart entrepreneurial choice, with unlimited 1.5% cash back on all purchases and a 0% APR that can help facilitate large purchases. Chase Freedom Unlimited brings similar perks to the table as well.
Paying for business expenses with a personal credit card is legal to do. Keeping personal and business spending on separate cards is the best way to avoid an accounting nightmare, but there’s no law saying you can’t use personal credit cards for both. There are good reasons why someone might want to do it, too. Personal cards have more user protections than business credit cards, for example, especially when it comes to financing. Plus, employees often end up paying for business-related expenses on a personal card before being reimbursed. So, why not earn the best possible rewards in the process?
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