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Legality of Mixing Personal and Business Charges

Posted By Jim On 08/28/2007 @ 2:35 pm In Business | 13 Comments

I had the following question on my post about 50 Fun Facts About Credit Cards [3] that I wanted to float by you all and see if my answer was on point or off base.

Jim,

Is it illegal to charge business and personal charges on the same credit card, if we pay each item separately from appropriate accounts? I have been doing this for years, and my accountant just informed me that it is not legal, which I think is wrong information, but cannot locate a place to find the answer — can you lend me some correct facts?? thanks — Lauren

I’m not a lawyer and so I can’t be certain of the legality but I don’t see why it would be illegal for you to charge business expenses on your credit card. Consider the situation where you’re an employee and you buy something for your employer. When you do that, you probably submit an expense report and your employer pays you back some time later. If the mixing of business and personal charges on the same credit card were illegal, then this wouldn’t ever happen.

Now, one reason why you wouldn’t want to mix the two is when you have a limited liability corporation (or some other entity) and you are trying to shield your personal assets from your business liability. In that case, you have to clearly delineate between your business and personal finances – mixing the two will blur that line and expose you to personal liability if something happens in your business. So, while charging business and personal to the same card is not illegal, it’s generally considered a bad idea because it takes away the only benefit an LLC provides – personal liability separation.

Anyone else care to weigh in?


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