01/25/2021
Did you know??
Q: Paying personal purchases on company credit card.
For example : I owe $150 on the credit card, $25 for personal purchases and $125 for business purchases. What is the best way of dealing with this? Do I draw the $25 out of the owners equity account?
A: The better guidance would be...
If this is a corporate credit card, this is called "commingling" and is mixing personal and business. Further explained, you are using the Corporate's finances for personal.
The whole point of having a corporation is the protection of Self from Business. Your personal assets and the corporation's assets and risks should be separate. Once you commingle, there is no longer that separation. This is called "piercing the corporate veil."
If you do not honor this separation, why would an attorney or collection agency honor it? And you really need guidance from your own CPA for all of this, as it is a horrible situation when allowed to continue.
If this is a personal credit card, then NONE of that credit card is tracked in the corporate data file. The shareholder "paid personally" and it doesn't matter how you paid for business activities: cash, check, whatever. You would simply reimburse yourself from the corporation. For instance, if you buy printer paper, then repay yourself on a check, for office supplies. Instead of buying from Staples, the corporation really is buying from you.
Makes sense?? Well, now you know!!
