Can I Use a Personal Credit Card for Business Expenses?

Why use a personal credit card instead of a business credit card?

Here are a few benefits of using a personal card over a business card:

• Fewer cards to manage. You'll use fewer cards as you won't need to worry about additional business cards.
• Better rewards and benefits. Personal credit cards generally have better rewards and benefits, such as higher cashback or travel points.
• Builds personal credit score. If you're okay with your current business credit score, you can build your personal credit score instead.
• Less bank accounts to maintain. As your expenses are on one bank account, you won't have to switch back and forth between financial accounts.
• Builds personal credit. If you're okay with your current business credit score, you can build your personal credit score instead.
• Easier access. Getting a personal credit card is easier than a business one, which may require business documents or an established business. As a new business or startup, documents can take time to obtain.

Cons of using a personal credit card over a business credit card

Although using a personal credit card may seem better, it has downsides (especially in the long run).

• Separating personal and business expenses. You must know how much you spent in each tax-deductible category when claiming tax deductions. If you have a few expenses, you can separate them manually.
• Too many expenses to sort. Overlooked tax write-offs can cost you thousands of dollars on your tax return. That's why we recommend using an expense tracker to help you track business expenses.
• Better rewards and benefits. Personal credit cards usually have better rewards and benefits, such as higher cashback or travel points.
  
• Bad for employees. If you're letting your workers use your personal credit card or worse - their own, it will complicate expense tracking. You'll have to track and separate their expenses and your own.
  
• Liability. If you run into any business financial trouble, this may put your personal assets at risk.

What are the benefits of using a business credit card?

• Simplified record keeping. Only using your business credit card for business purchases lets you easily track and claim tax deductions.
• Employee cards. Most card issuers will let you create cards for your employees to track and limit their purchases.
• Professionality. Using business cards for your purchases makes your business look more valid.
  
• Benefits and rewards for business categories. Some business credit cards will have better cashback rewards for expenses like office supplies, internet, and phone bills. They'll also have higher reward caps.
  
• Better fraud detection. You can track your expenses in real-time, as most business cards will have purchase notifications, spending, and category limits.

Can I use a business credit card for personal expenses?

It's not illegal to use a business credit card for personal expenses. Still, it can be a violation with your card issuer. Most terms and agreements for business credit cards don't allow for personal purchases. It also makes expense tracking complex as your expense types are mixed up.

Is my personal credit score used for business credit?

Yes, to an extent. When you first start out, banks may check your personal credit score to see if you can pay them back. Eventually, your business credit score will be used for business loans and other opportunities.

Can I convert my personal credit card to a business credit card?

Yes, depending on your credit card issuer. You'll need to contact them as most won't have an option for self-service. However, we don't recommend it as you should separate personal and business!

Conclusion

Using your personal credit card for business expenses is legal and may not be optimal - especially in the long run. As you can write off business purchases either way, you'll want a business expense tracker to sort your purchases. It's okay to start out using your personal credit card for business. Then as your business grows, get a business credit card for better expense tracking and business savings.