How to Separate Your Personal and Business Credit Cards

Dayton Uttinger  | 

After managing the finances of your small business for awhile, you think you’ve got the basics down. Or at least, you have a much better idea of what you got yourself into. Running a successful business takes something different for every niche and location, but there are definitely some common pitfalls that you should avoid. One of the biggest mistakes small business owners can make is mixing their personal and business finances.

Now, you may think that this is unavoidable. After all, what were you supposed to fund the business with if not some personal capital?  This is a valid point; inevitably, you have invested some over your own personal resources. What’s the harm if it’s coming out the same pot? This is the perception of many business owners, but complacency could lead to painful tax audits, hurt both business and personal credit scores, and ultimately damage the health of the business itself.

The Problem with Mixing Business with Pleasure

The temptation for business owners to put personal charges on the company card is mostly rooted in a discrepancy of resources. Business credit cards typically have a higher limit, and you likely have more business resources than you do personal capital. So why charge your personal card when you could pay it back more easily under the business’s tab?

Well, first of all, charging personal items on your business card can lead to problems with your taxes. Not only will filing them be a nightmare (that dinner during your Vegas conference: business or pleasure?) but if you are ever audited, it will be very messy. Unless you keep impeccable records, which can be especially difficult while running a business, you’ll develop a persistent headache.

Second of all, using your business to cover personal expenses has financial disadvantages as well. Personal credit cards usually have better rewards, and they are protected under the Credit CARD Act of 2009. So while personal credit card users will receive advance notice if their rates or due dates change, this courtesy is not extended to business cards. Personal charges have 21 days minimum to be payed back, but if you buy that flat screen TV under your business card, you might only have to next week to gather the money.

Using a personal card to cover business expenses, however, is also not a good idea. While personal credit cards offer better protections, they also have lower limits. You don’t want to exceed your limit because of a charge that could have easily been put on the business card instead.

Instead, just try to keep your finances as separate as possible.  Admittedly, this is only possible to a certain degree.  Your business and personal credit impact each other, you likely invested some of your personal capital in the business, and you remain in charge of both accounts. So, given these potential hurdles and temptations, how exactly do you do you keep them apart?

How to Avoid the Problem

This is the trap many business owners fall into you: you’re out at dinner with some colleagues, pledging to talk business. However, somehow you only spent about a third of the time on work, and instead you spend most of the time laughing about that mishap from Monday morning. Now you’re three cocktails in, and when the server asks if it will all be on one check, one of your colleagues nods, and now you’re stuck between handing over the business card or footing the entire bill yourself.

Stop. This is a false dichotomy. In reality, there’s a hidden third option: after business is concluded, if you and your colleagues wanted to stay and talk personal matters over drinks, by all means, do so. But pull the server aside, ask to close out now and open a new tab. If at all possible, separate the two activities financially. While it’s tempting to rationalize one-off compromises, this is a slippery slope leading to bad habits.

If you take your family with you on a business trip, the company can pay for your plane ticket, but not theirs. If you need a computer for work, let that computer be for work. Don’t let your kids download and play games on them.  Don’t think that you’ll fix your spending mistakes later; it’s so much easier to just avoid that game altogether.

When you’re running your business and personal finances, you can’t make decisions based solely on convenience. Instead, every purchase needs to have some forethought. Running a business is already a precarious balancing act as it is; you shouldn’t tip the scale in either direction, or it might all fall apart.

For more tips and guides, visit our small business resource center or credit card learning center.


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Dayton is a chronic Wikipedia addict, which is detrimental to her social life but stellar for her writing. She resides in Boise, ID, surrounded by her own frantic outlines, highlighted encyclopedias, and potatoes. The latter was not by choice.

This post was updated December 11, 2017. It was originally published April 18, 2017.