Allowing Your Business Credit Cards Get Personal

Kimberly Watson, Editor in Chief
July 30, 2012 /

It is the practice of many small business owners to separate their work related expenses from personal finances by using business credit cards. This is a useful process in maintaining records for accounting and tax purposes. However, these good intentions do not guarantee that your credit cards follow the same route!

Providers of business credit cards request a Social Security number which enables them to research a credit record before approving issue of a card. Wells Fargo is one provider who admits that they consider personal and business accounts during the application process.  The reason given is that a lean business record could be uplifted by a solid personal profile. A business loan is usually required to be supported by a personal guarantee.

In many instances, business credit cards terms include the condition that any credit applied to the business, ultimately becomes a personal responsibility. The “Ink card” from Chase, requires that the applicant checks a box at the top of an application form, showing that the applicant agrees they will be responsible for the payment of any outstanding balance on the account.

In certain circumstances, these conditions are reasonable, for example; small businesses applying for business credit cards without a firm credit foundation, or history. However, a personal commitment is two sided, especially if a business should fail. The card provider would be entitled to claim from personal assets, even if bankruptcy was declared. It is usual, for personal assets to be protected from business bankruptcy.

Although some business owners may consider it unwarranted having business credit cards; establishing accounts in the name of a business, is an important step in separating business and personal credit. This could provide a benefit with improved accountancy tools, not available on a personal basis.


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