Should You Use a Personal Credit Card for Business Expenses?

As a small business owner, many responsibilities fall on your shoulders. And, as time is money, you probably multi-task to increase your efficiency whenever possible – such as when running errands and making purchases.

There’s nothing wrong with a little bit of multi-tasking to increase efficiency. But there’s one practice you’ll want to avoid – using your personal credit card for business expenses. Many professionals have done this at one time or another, so it probably seems like there’s nothing wrong with this practice but there are four clear advantages to keeping your personal and professional purchases separate.

1. Accounting Purposes

It can be a major pain to document professional versus personal expenses. You have to save all your receipts, combing through each item line by line. And how do you treat items like coffee or toilet paper, which you may share between your house and office? By diligently keeping these purchases separate, you’ll save yourself (and your accountant!) a lot of time and headache medicine.

If you set up an online account with your business credit card, you’ll also get a more complete snapshot of your spending throughout the month. Many credit card companies now offer their business clients tools for navigating through their online banking suites including detailed statements that categorize purchases into various spending classifications. This will help you fine-tune your monthly and quarterly budgets and make it easier to identify any seasonal purchasing trends.

2. Protect Your Personal Credit

The last thing you want to do is inadvertently harm your personal credit with your business purchases. With credit scores being a major factor in future loan interest rates and limits, it’s important that you do all that you can to keep your personal credit in tip-top shape.

Personal credit score algorithms take into account your credit card utilization and payment history when they calculate your score. This means if you end up maxing out your personal card due to business purchases, your score may drop. The same is true if you end up being late on your payment one month because your business income was lighter than expected.

3. Boost Your Business Credit

Speaking of credit, as a small business owner, you’ll want to do all that you can to boost your business credit score. After all, as your company begins to expand, you may need to borrow funds to move into a larger facility or invest in new equipment. Even if those goals are extremely far off, you’ll want to lay the ground work now to ensure you qualify for a business loan in the future.

One way to do this is by establishing your business credit with a business credit card. Through responsible usage like paying the bill on time each month, you’ll be building your credit score so it’s ready to help your business get a loan when you’re ready to take the next step.

4. Take Advantage of Rewards

Rewards often are the very reason why business owners skip the small business card and stick to their personal credit card. If you have a personal credit card loaded with rewards, it can be very tempting to use it every chance you get; but using your business purchases to help offset the costs for your sweet summer vacation makes accounting a bit tricky. Plus, there’s an entire collection of small business credit cards that offer fantastic business rewards. Ranging from cash back to travel to merchandise rewards, these cards are focused on perks that businesses can truly enjoy.

If you’re unsure on where to start when searching for the right rewards card, you can start at a credit card comparison site like CreditDonkey.com. CreditDonkey has an entire section dedicated to business credit cards, so you’re sure to find one that fits your needs.

As you can see, there are some huge benefits to utilizing your business credit card. On your next shopping trip, take a couple of extra minutes to separate your personal and professional purchases. You’ll get to take full advantage of your business credit card and your business (and personal!) bank accounts will thank you.

Daniela Baker is a social media advocate and blogger at CreditDonkey.com, a small business credit comparison website. Daniela focuses on how entrepreneurs can use credit to build and grow their business.

About Deborah Sweeney

is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.

3 thoughts on “Should You Use a Personal Credit Card for Business Expenses?

  1. I’ve used personal credit cards for business expenses for years and never had a problem–thanks to a reliable accountant who processes reimbursements quickly.

    I did some digging and even if you can’t get a business credit card (or don’t want one, for whatever reason), there are some ways to charge business expenses without using your own credit card; borrowbusinesscredit.com is one way, and there are other ways to “borrow” others’ credit cards. I haven’t ever borrowed someone else’s so I can’t vouch for that, though.

  2. Thanks for passing along the site borrowbusinesscredit.com info, Chris, though we’re pretty sure that “borrowing” a credit card from someone else wouldn’t be the best laid plan unless they specified they were aware of the borrowing and clear on how much could be charged on that card. Thanks for reading!

  3. Would there be any repercussions if I apply for a business card and use it on personal expenses to gain rewards? I.e. The Chase ink has 5x points on internet/cable bills. I have payed my personal credit card bills in full every month for 10+ years so I wont have a problem with paying interest. I was just wondering if it is illegal to use a business card for personal spending and would the Credit Card company close my account. Thanks.