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Utilizing my credit cards to start up my business?

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Anonymous
Not applicable

Utilizing my credit cards to start up my business?

I have a special credit card that would meet the critieria to start my business. It came to me like a light bulb after remember the built-ins of my card. I wouldn't have any inventory because I will only purchase when a customer order comes through. On top of that, I have a 15 day grace period if they change their mind. On top of that, I have almost a year to repay it with no interest if it goes beyond the 15 day period. I'll pay off my card once the payment comes in which would be less thasn 30 days but the profit on it would be astronomical. I have potential clients who would pay double the retail price. Should I do this? I realize that I'm somewhat vague on my idea for the fact that I'd like to keep most of the details to myself but I think the story is straight forward. Should I use my credit card as a part of my business? 

Message 1 of 11
10 REPLIES 10
fullstackdev
Frequent Contributor

Re: Utilizing my credit cards to start up my business?

It sounds like you would be using your credit card to float your business expenses for a few weeks at most, yea? If so, that's the perfect scenario for using a credit card or a charge card even.
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Message 2 of 11
Anonymous
Not applicable

Re: Utilizing my credit cards to start up my business?


@fullstackdev wrote:
It sounds like you would be using your credit card to float your business expenses for a few weeks at most, yea? If so, that's the perfect scenario for using a credit card or a charge card 
Exactly! It would save me the hassle of shelling out some money ahead of time lol. I thought about a charge card but the 12 month no interest idea would be extra cushion in case I run into a situation.
Message 3 of 11
redpat
Senior Contributor

Re: Utilizing my credit cards to start up my business?

Yes, use your card.  Most or not all small business start-ups use personal credit cards for working capital.  The biggest problem they have is they fail or get too far in the hole.

Personal Cards: Amex Plat | Amex Delta Res | CSR | Citi AA Exec Business Cards: Ink+ | Amex BGR
Message 4 of 11
grillandwinemaster
Valued Contributor

Re: Utilizing my credit cards to start up my business?

Use your card, but I would add one caveat!

 

As a small business owner myself, Make sure you have funds available to cover the charges you make to your card in case your client defaults, or in case something else goes wrong. 

 

Murphy's law states:

 If something can go wrong, it will, and usually at the worst time.”

 

Best wishes to you on your endeavor!


Current Scores 3/2016 Equifax 676 Transunion 697 Experian 648 Goal Scores: 720's accross the board. Gardening Goal: 3/2017
Message 5 of 11
SouthJamaica
Mega Contributor

Re: Utilizing my credit cards to start up my business?


@Anonymous wrote:

I have a special credit card that would meet the critieria to start my business. It came to me like a light bulb after remember the built-ins of my card. I wouldn't have any inventory because I will only purchase when a customer order comes through. On top of that, I have a 15 day grace period if they change their mind. On top of that, I have almost a year to repay it with no interest if it goes beyond the 15 day period. I'll pay off my card once the payment comes in which would be less thasn 30 days but the profit on it would be astronomical. I have potential clients who would pay double the retail price. Should I do this? I realize that I'm somewhat vague on my idea for the fact that I'd like to keep most of the details to myself but I think the story is straight forward. Should I use my credit card as a part of my business? 


It can complicate your tax return preparation to use personal credit cards directly for business expenses.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 6 of 11
redpat
Senior Contributor

Re: Utilizing my credit cards to start up my business?


@SouthJamaica wrote:

@Anonymous wrote:

I have a special credit card that would meet the critieria to start my business. It came to me like a light bulb after remember the built-ins of my card. I wouldn't have any inventory because I will only purchase when a customer order comes through. On top of that, I have a 15 day grace period if they change their mind. On top of that, I have almost a year to repay it with no interest if it goes beyond the 15 day period. I'll pay off my card once the payment comes in which would be less thasn 30 days but the profit on it would be astronomical. I have potential clients who would pay double the retail price. Should I do this? I realize that I'm somewhat vague on my idea for the fact that I'd like to keep most of the details to myself but I think the story is straight forward. Should I use my credit card as a part of my business? 


It can complicate your tax return preparation to use personal credit cards directly for business expenses.


Not really, keep all your business receipts that you reimbursed yourself with a discription of what those charges were for.  For accounting purposes Debit expense, Credit Loan or Draw to book expense and when you pay yourself back Debit Loan or Draw, Credit Cash.  

 

See not that complicated, lol!

Personal Cards: Amex Plat | Amex Delta Res | CSR | Citi AA Exec Business Cards: Ink+ | Amex BGR
Message 7 of 11
scenery_guy
Established Contributor

Re: Utilizing my credit cards to start up my business?

Agreed. As a sole proprietor I routinely mix use of my personal cards for business and my business cards for personal expenses. IN the eyes of the IRS it's a my money so no need to play like the corporate veil protects me. 

If I were incorporated still no big deal AS LONG AS you have a clear paper trail for accounting and audit purposes. Sure, it's more work during bookkeeping but a few dozen transactions a month are no problem. A few thousand a month would be an issue. 

Message 8 of 11
pizza1
Community Leader
Super Contributor

Re: Utilizing my credit cards to start up my business?

My question in this whole scenario would be, what if the lender of your personal card see's the trend, and the same purchases that could be business like?? Do they even care? or......

Does the lender only get concerned if its the opposite scenario where you're using business cards for personal?

Just curious..
Message 9 of 11
Creditaddict
Legendary Contributor

Re: Utilizing my credit cards to start up my business?


@pizza1 wrote:
My question in this whole scenario would be, what if the lender of your personal card see's the trend, and the same purchases that could be business like?? Do they even care? or......

Does the lender only get concerned if its the opposite scenario where you're using business cards for personal?

Just curious..

Nope, as long as they don't see a link back to you like you are cash advancing yourself.

 

Message 10 of 11
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