Will I get in trouble for not using a Biz CC?

[SuperKirby]

My only business expenses are primarily just airfare and gas. I receive a set monthly stipend for the expense and get paid regular salary on top of it.  I put all of that on my personal Chase cards, anywhere from $10,000 - $20,000 a year (I also have a 1099 tax form for this job).

That is small for any credit card issuer to give a darn, right? Or should I be opening a biz credit card account? I rather not since i hate carrying too many cards and don't want a HP.

[scenery_guy]

You are going to jail. Oh man that's so bad... 

I'm kidding! You are fine. Keep doing what you are doing and keep paying the bill and you will be fine. You are getting rewards for that spending correct? 

[SuperKirby]

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@scenery_guy wrote:

You are going to jail. Oh man that's so bad... 

I'm kidding! You are fine. Keep doing what you are doing and keep paying the bill and you will be fine. You are getting rewards for that spending correct? 

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Lol. I just read about too many Chase shut downs so I get nervous, even though their shut downs are usually related to something with extreme high spending. Also, for awhile I was putting $1000 a month in gas, or sometimes book $4000 worth of airfare in one month - thought that looked kind of shady as a personal spend.

Overall it never goes past 20-25K in annual business spend. Yes I was putting it all on my Chase Sapphire Preferred, milking UR points from business expenses! thanks...

[scenery_guy]

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@SuperKirby wrote:

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@scenery_guy wrote:

You are going to jail. Oh man that's so bad... 

I'm kidding! You are fine. Keep doing what you are doing and keep paying the bill and you will be fine. You are getting rewards for that spending correct? 

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Lol. I just read about too many Chase shut downs so I get nervous, even though their shut downs are usually related to something with extreme high spending. Also, for awhile I was putting $1000 a month in gas, or sometimes book $4000 worth of airfare in one month - thought that looked kind of shady as a personal spend.

Overall it never goes past 20-25K in annual business spend. Yes I was putting it all on my Chase Sapphire Preferred, milking UR points from business expenses! thanks...

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I too put business spend on my CSP and not a peep from Chase. They know it's business spend because normally it would be on one of my Ink cards. Just treat it a "reimbursable" expenses like every other business person and you will be fine. Glad to know you are getting fat points!

[rlx01]

No issuer cares about personal cards used for business expenses, because that's none of their business. No one has ever or will ever be "shut down" for that. (Though if you're the business owner and you have a C/S corp, you should really think about mixing personal and business expenses since that can [theoratically] be used to pierce the corporate veil).

What issuers care about is using business cards for personal expenses (which is why all business card apps have language that says "must only be used for business expenses"). That's because business cards don't fall under the CARD Act, and so there's almost zero regulation on them. Additionally, they don't report on your CR. You will be shut down if whatever algorithm the issuer uses decides you're putting personal spend on business cards.

[SuperKirby]

@scenary_guy, glad I am as well, thanks for the insight.

@rlx01, i'm glad to hear. And yes, if I was a business owner, totally different story - I wouldn't want my personal spend mixed with my business spend anyway. Since my job is a typical salaried paid job (and getting a seperate check for the expenses), mixing them together is easier so I can milk my reward points

Very happy to know I can keep doing this and have a peace of mind. thanks all.

ETA: I forgot to ask, if my business expenses become really high, my total annual spend by Chase may reach my annual reported income, any negative repercussions because of that?

[scenery_guy]

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@SuperKirby wrote:

@scenary_guy, glad I am as well, thanks for the insight.

@rlx01, i'm glad to hear. And yes, if I was a business owner, totally different story - I wouldn't want my personal spend mixed with my business spend anyway. Since my job is a typical salaried paid job (and getting a seperate check for the expenses), mixing them together is easier so I can milk my reward points

Very happy to know I can keep doing this and have a peace of mind. thanks all.

ETA: I forgot to ask, if my business expenses become really high, my total annual spend by Chase may reach my annual reported income, any negative repercussions because of that?

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Doubt it. Again as long as you are paying the bill they will be fine. Manufactured spending would  be the no no they are looking for ($50K in gift cards to bluebird then to cash) but legit spend is fine. Worst case they ask and you show them reimbursable business expenses. 

I guess I am double bad as I put personal spend on business cards at times. Again not a peep about it but I have been a PIF customer for a very long time. IF I was ever asked about it I would simply say "it was the card I had in my pocket, my finances are not your issue as the bill was paid in full so take a hike". 

Keep in mind I am a sole proprietor dba my own name. I have separate business and personal accounts and do my best to keep the funds isolated but my bookkeeper can mop up the mess later as in the eyes of the IRS (the only real important clown in the room) my business money and my personal money are one and the same from the moment I receive it. 

[Open123]

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@scenery_guy wrote:

Keep in mind I am a sole proprietor dba my own name. I have separate business and personal accounts and do my best to keep the funds isolated but my bookkeeper can mop up the mess later as in the eyes of the IRS (the only real important clown in the room) my business money and my personal money are one and the same from the moment I receive it. 

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Right, the lines are so blurred between private and business funds for those of us who own or are partners in private enterprises.  

Though all issuers have the restrictive language in the T&C, they only exercise the clause when they need a reason to close your account.  In the end, the only thing any lender really cares about is to be (1) repaid, and (2) post Patriot act, not be unwittingly involved in any kind of money laundering.  From my experience, once lenders (my experience with Chase and Amex) are comfortable with your finances and legitimacy of your business, they couldn't care less which card you use for whatever "legitimate" purpose.

However, the main reason to keep business expenditures on a "business" card is for (1) to show the IRS you have a mechanism to accurately differentiate business vs. Personal expenditures, and (2) to protect your partners from your misallocating funds.  

In the case of the IRS, if you were to write off leased vehicles, cell phones, or business trips, they're going to want to see proof of your expenditures for a personal phone, personal vehicle, and personal vacations.  Here, clearly seperating personal and business charges will help during the invevitable audit, more so than for the rarely enforced CC T&Cs on what charges one can make on what card.

PS - You can still write off a car or cell phone without having another, but only at 1/3.

[scenery_guy]

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@Open123 wrote:

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@scenery_guy wrote:

Keep in mind I am a sole proprietor dba my own name. I have separate business and personal accounts and do my best to keep the funds isolated but my bookkeeper can mop up the mess later as in the eyes of the IRS (the only real important clown in the room) my business money and my personal money are one and the same from the moment I receive it. 

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Right, the lines are so blurred between private and business funds for those of us who own or are partners in private enterprises.  

Though all issuers have the restrictive language in the T&C, they only exercise the clause when they need a reason to close your account.  In the end, the only thing any lender really cares about is to be (1) repaid, and (2) post Patriot act, not be unwittingly involved in any kind of money laundering.  From my experience, once lenders (my experience with Chase and Amex) are comfortable with your finances and legitimacy of your business, they couldn't care less which card you use for whatever "legitimate" purpose.

However, the main reason to keep business expenditures on a "business" card is for (1) to show the IRS you have a mechanism to accurately differentiate business vs. Personal expenditures, and (2) to protect your partners from your misallocating funds.  

In the case of the IRS, if you were to write off leased vehicles, cell phones, or business trips, they're going to want to see proof of your expenditures for a personal phone, personal vehicle, and personal vacations.  Here, clearly seperating personal and business charges will help during the invevitable audit, more so than for the rarely enforced CC T&Cs on what charges one can make on what card.

PS - You can still write off a car or cell phone without having another, but only at 1/3.

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+1

My one and only IRS audit (knock on wood) went well. They asked for documentation similar to what you listed and I showed up with a hand cart and stacks of banker boxes full of loose receipts. Awkwardly worked in my favor as they eventually were satisfied that I had "at least" enough receipts to cover my deductions. They actually found a few that allowed me to amend my return and receive a bigger refund check. My accountant tried real had not to laugh thru the meeting as I did my best Jerry Lewis looking for particular receipts. My filing method was reverse chronological until the box was full then start again. I had spreadsheets and QB files for the accountant but they wanted to see the actual receipts.

As a small business owner what is this personal vacation thing you mention?