Enterprise credit cards were originally made to help businesses pay for their expenses. Nevertheless, many business owners have taken advantage of their high credit lines and other perks to make personal purchases with their company accounts. The credit card company may not have an issue with this, assuming you pay the card balance back, but there is still a spending etiquette that you must keep in mind with any business card. Here’s a guide explaining what you should and should not buy with an enterprise credit card.
How to Spend Money on an Enterprise Credit Card
Ideally, your personal expenses should be kept separate from your business expenses. That means that every dollar you spend on your enterprise credit card is somehow linked to your business. Examples of business expenses include:
- Office supplies
- Catering for conferences, employee meetings, etc.
- Hotel fees (for business trips)
- Rental cars
- Utilities and other bills related to the business
- Remodeling fees
As long as the money is going toward your business and not your personal life, it can come from your business credit card. Keep in mind that you will have to pay the balance back, just as you would with any other credit card. It may be tempting to blow through your available balance quickly, but only do so if you know you can pay it back in a reasonable amount of time.
How NOT to Spend Money on an Enterprise Credit Card
You should never put personal purchases on your business credit card, even if you pay them back quickly. For instance, you may be tempted to buy a new bedroom set for your home with your business card because it has a high enough spending limit to support such a purchase. If you do that though, you will not only be abusing the line of credit available to you, but you will also be mixing your personal finances and business finances. Come tax season, this will make it much harder for your accountant to work through your profit and loss statement.
Proper Spending Habits Lead to Easy Bookkeeping
Think of your enterprise credit card as a real-time ledger of your business expenses. If you keep your personal bills on a separate account, you can simply hand your CPA all of your credit card statements at the end of the year. Since all of the transactions will be for your business, your CPA can easily create tax deductions for you and reduce your taxable income as a whole. This ultimately saves you money in labor because your accountant does not have to assess all of your receipts individually.
Keep All Receipts Anyway
Even if you use your enterprise credit card purely for business expenses, there may come a time when some of your transactions are questionable. This is especially true if you are buying products from a big box store like Walmart or Target. You need receipts to show that those purchases were in fact used for your business. Ask your accountant what else you can do to better prepare your enterprise credit card expenses, and you can have an enjoyable experience from start to finish.