Business vs. Personal Bank & Credit Card Accounts

August 19, 2012

Credit Card Accounts:  Mixing Business & Personal 

I’ve had an opportunity now to work with a few clients who use multiple bank cards and credit cards for their business expenses.  I will confess, I’ve used my personal credit card and debit card to purchase business related items.  While it may seem convenient in the moment to just throw out the card that is easiest to get out of your wallet, over time, these transactions can become quite a tangled mess in your business accounting.  I would implore all sole proprietors and single member LLC’s to set up their business accounts to work separately from their personal accounts.  If you need a line of credit due to cash flow issues, do your best to get a business credit card or line of credit that is used only for your business.  It is not impossible to track business expenses over multiple accounts, but it does add to the complexity of your Quick Books file and may add expense as well if you are paying an accountant to record your transactions for you.  Lastly,  keeping your business transactions completely separate from your personal transactions can provide a certain level of protection if you are operating as an LLC.  If you are sued and you have blended too much of your business with your personal spending – you could lose the protections offered by the LLC – and be treated like a Sole Proprietor – the exact opposite of why you more than likely set up the LLC in the first place.  So take my advice, get those accounts separated – use business for business only and personal for personal only.  It will save you a lot of heart ache in the end.

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