Can you use your personal credit card for sole proprietor business expenses? Does the IRS care?

Question

If I want to mix my business and personal expenses on one credit card does it matter? I mean if I charge a business expense on a personal credit card does the IRS care? It is still a business expense according to the IRS right?

Answer 1

It's not illegal, as long as you keep proper records of what was business and what was personal, but is very bad practice since it makes the record keeping  a lot messier.

Answer 2

Yes, you can.  But if you do a lot of credit card buying, it makes a lot of sense to get a separate business account.  It not only makes the recordingkeeping almost automatic, you can also deduct the interest as a business expense.  You cannot do that if you comingle business and personal expenses since there is no way to determine how much interest is from the personal expenses and how much is from business expenses.

Answer 3

As long as you use proper accounting principles and pay the proper amount of taxes -- they don't care.  And, no, personal expenses on a business credit card do not count as business expenses.

Credit card companies can list  your statements by categories if you wish -- even as a yearly printout.  That may help you reconcile personal from business expenses.

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Answer 4

as far as in know, a sole proprietor can do this.  there is no co-mingling of funds here because all the funds are yours and not your customers' or someones else's business funds.

Answer 5

The IRS doesnt care as long as the tax return is done properly. They wont even know unless they audit you. It is not good business practices to do it though.

Answer 6

As long as you can show business purpose it's OK.  If you get into some high volume it would make sense to use separate accounts but for small stuff, no bother.  Keep your receipts.