Paying your new small business’s expenses with your personal card may be convenient, but it has limited benefits and adds new risks
The editorial content below is based solely on the objective assessment of our writers and is not driven by advertising dollars. However, we may receive compensation when you click on links to products from our partners. Learn more about our advertising policy.
The content on this page is accurate as of the posting date; however, some of the offers mentioned may have expired. Please see the bank’s website for the most current version of card offers; and please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.
Dear Your Business Credit,
If I open a personal credit card to pay for a new business, can the bill then be paid from the business account? — Natasha
I ran your question past Robert Brennan, an attorney at SoCalCreditDamage.com, in La Crescenta, California.
He said that this is really an accounting issue. Let’s say you use your “business” card only for your startup and save receipts to show you’re using it solely for that purpose. In that case, you can count the card as being for business use on your taxes, he noted in an email. However, if you mix in too many personal charges on your card, you will likely run into problems, he said. That is an easy temptation for a small-business owner, especially if you carry the card in your wallet.
Your note mentioned you are considering opening a credit card to pay for a new business. I hope the card is not going to be your sole source of financing and that you keep your borrowing to a minimum.
It’s fun to read stories of entrepreneurs who started out with almost no capital and achieved mind-boggling success. But what seldom gets covered are all of the entrepreneurs who use credit card financing to fund a business that doesn’t work out or may have succeeded if only they had more money to keep going. Sometimes I get letters from these folks in the aftermath, and paying down their debts can be a nightmare.
I’m not saying this to discourage you. Wells Fargo found in a January survey of small businesses that optimism is at a seven-year high. My advice is to save up what you will need to start and run the business for at least the first three months, and then open the business. Seeing if you can sock away the money will help you figure out if you have the financial discipline to run a small business. And it will get you off to a better start than many businesses have. Good luck!