While at times it might seem convenient to use your business account to pay for personal expenses and vice versa, it’s not a wise practice. In order to stay above reproach, keep things clean, and avoid legal issues later, it’s best to maintain a separation of church and state, so to speak.
Mixing your personal and business expenses on your credit cards can become a slippery slope that will make reconciliation very difficult later. Following the virtual paper trail and sorting out what goes where can be like a cat playing with yarn – a tangled mess of lines going everywhere with zero clarity.
Plus, even if you pay every cent you owe back to your business, the records reflect poorly on you and can result in unintended consequences. If you are ever audited, a personal expense on your business account gives the IRS the uncertainty it needs to believe you could be committing fraud by classifying personal expenses as business deductions. Avoid giving the IRS probable cause to dig deeper into your finances by keeping completely separate accounts.
Carry your business and personal cards with you at all times so you won’t have a reason to use the wrong fund. I’m here to help if you want to strategize your spending – or just exchange cute cat photos. Let’s schedule a call.