Business Credit Card usage for S-corp?

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Topic Author
ChinchillaWhiplash
Posts: 1574
Joined: Sat Jan 20, 2018 4:40 pm
Location: Land of Hypoxia

Business Credit Card usage for S-corp?

Post by ChinchillaWhiplash »

Any tips for using a business credit card? Was thinking of using for normal business expenses such as insurance, food, certifications/professional memberships, business trips/conferences. Would pay off each month and use to get cash back on all purchases. Also thought it might be easier to keep track of yearly expenses. Our accountant recommended using one. Any reasons not to?
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: Business Credit Card usage for S-corp?

Post by mhalley »

Clark Howard recommends using a designated personal cc instead of a business one.
... small business credit card interest rates went up six times faster than interest rates on consumer cards immediately after the CARD Act went into effect back in 2010.

But, wait there’s more! There’s also a second level of liability specific to small business cards. When you use one of these cards, the lender can do what’s called ‘piercing the corporate veil.’ In plain English, that means if your business can’t pay the bill, the bank comes after you personally.

And what happens when you lose a business card or it gets stolen? The liability of a small business can be unlimited under current law. Contrast that to the fact that an individual’s liability on a stolen or lost personal card is capped at a maximum of $50.

No matter how you slice it, business cards absolutely stink for small businesses! So I have a simple workaround strategy: Use personal credit cards for your business. You can pay the bill out of your business funds, but don’t actually use any business cards. This is a surefire way to protect yourself.
https://clark.com/business-entrepreneur ... redit-car/
Topic Author
ChinchillaWhiplash
Posts: 1574
Joined: Sat Jan 20, 2018 4:40 pm
Location: Land of Hypoxia

Re: Business Credit Card usage for S-corp?

Post by ChinchillaWhiplash »

mhalley wrote: Sat May 26, 2018 5:10 pm Clark Howard recommends using a designated personal cc instead of a business one.
... small business credit card interest rates went up six times faster than interest rates on consumer cards immediately after the CARD Act went into effect back in 2010.

But, wait there’s more! There’s also a second level of liability specific to small business cards. When you use one of these cards, the lender can do what’s called ‘piercing the corporate veil.’ In plain English, that means if your business can’t pay the bill, the bank comes after you personally.

And what happens when you lose a business card or it gets stolen? The liability of a small business can be unlimited under current law. Contrast that to the fact that an individual’s liability on a stolen or lost personal card is capped at a maximum of $50.

No matter how you slice it, business cards absolutely stink for small businesses! So I have a simple workaround strategy: Use personal credit cards for your business. You can pay the bill out of your business funds, but don’t actually use any business cards. This is a surefire way to protect yourself.
https://clark.com/business-entrepreneur ... redit-car/
Thanks for that info! Sounds like it would be best to steer clear of the business card.
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