Personal Credit Card for Business Problems

Using a personal credit card for business usually doesn't create problems--unless you charge business expenses to the card and are not reimbursed. Some companies fail or file for bankruptcy while still owing expense reimbursements. In some instances the money is never paid, forcing the employee to personally pay business charges.

Liability

Personal credit cards can also be a problem when you own the business. Some entrepreneurs structure their businesses as separate legal entities responsible for their own debts. Theoretically the business could file for bankruptcy without the owner having financial liability. However, a personal credit card cannot be included in a business bankruptcy filing. As a result, a business owner with say, $20,000 in business expense on his personal cards remains liable for the debt even if his business files for bankruptcy.

Bookkeeping

Mixing personal credit cards with business expenses can also cause problems when you are sorting through through your credit card statement and preparing expense reports. You may find yourself spending extra time determining which charges on your card are your personal charges and which should be submitted on an expense report. Some people solve this by having one personal credit card that they use strictly for reimbursable business expenses. That makes the accounting much easier.

Policy

Some people want to use their personal card for business so that they can accumulate free travel awards and other perks because of all the business expense they are accumulating on the card,. However, this becomes an issue when the company mandates that all employees must use corporate-issued credit cards--with the company keeping all of the travel awards and perks.

Carefulness

Personal credit cards are commonly used in business and just a few precautions should keep you from developing problems. Turn in expense accounts regularly and avoid placing unusually large business expenses on your personal card. Business owners should avoid using personal cards for business, if possible. Instead, slowly build business credit in the company's name as the business grows.