New business purchases legal help wanted

feygan

Quick background first. I have just started as a sole trader and my girlfriend has recently been made redundant and now is on JSA. Due to a low credit score I have no credit/store cards of any kind and just a debit card for my personal account and one for the business. My girlfriend does have a credit card which she gets cashback on.

So my question is can I legally purchase stock and other business materials using her credit card and then give her the money directly from my business account to pay the card bill each month?

My first thought is that I will come unstuck when I come to do my tax returns as all recipts will obviously not show my debit card number. This leads me to believe that I would need to make my girlfriend either an employee or partner in the business? However is there then a way to do that where she will not be heavily penalised by HMC when she starts full time employment herself?

The amount I spend each month on business stock etc would add up to quite a heafty figure in cashback so it seems just good money saving if there is a legal way to do this properly?

patman99

There are a lot more complications than you think. For a start-off your g/f is on benefits and if do what you suggest then she may well get into trouble with the DWP who might assume she is running the business.

I'm not sure, but I would assume that the credit card provider would have something in their T&Cs regarding using the CC for business transactions. If they haven't then why hasn't every sole trader and SME signed-up for one ?.
Also, the cashback cards tend to have maximum monthly cashback limits in place.

You could try asking your suppliers if they would do a discount for payment with order rather then the usual business system of 30 days.

amcg100

Your post does not say if you live with your girlfriend or not. If you do, then DWP will stop benefits if you have income - I assume however that you do not stay together.

From an accounting point of view it does not matter how you pay for stuff, you could use your granny's premium bonds if you want so long as you keep a receipt for tax purposes.

Suggestion - most credit card providers welcome ( and positively advertise for ) additional card holders for their accounts. This means that your GF could get a credit card in your name,- the business expenses would then appear on a seperate statement and you could either pay the bill or give her the money ( obtaining a receipt of course )

The only drawback for your GF is that if you go bust or fall out etc, she will be liable for the oustanding balance.

If you trust each other - go for it

good luck !!

feygan

Thanks for the help, we currently don't live together so there are no worries on the benefit side of things for her. I was mostly concerned about recipts etc for the taxman. Although all invoices will be in either mine or my business name.

So just to be 100% provided the invoices are all correctly in mine and my company name, then the actual card recipts are for nothing other than to ensure the numbers match? This leaves me free to take cash from my business account and give it to anyone on the street to go and make the actual purchase if I so chose?

On the additional card holder side I was wary for two reasons, firstly will this not tie us together as far as the benefit office is concerned? We had this once before when nearly moving in together. It was explained by a benefit officer that according to them you can happily have a commune hippy house and sleep with everyone under the roof and so on but it was actual joint finances that qualify you as a couple. So the moment we had joint accounts, a joint tennancy etc we became a couple.
With that in mind will me being an additional card holder not qualify us as having a joint credit card or not?

Finally should that still be legal will asking for an extra card holder require a credit search to be made? I don't have any because I know I have a low rating, so I try to never get checks done that involve her so as to not damage her rating on checks that will likely get turned down due to me.

Savvy_Sue

amcg100 wrote: »

Suggestion - most credit card providers welcome ( and positively advertise for ) additional card holders for their accounts. This means that your GF could get a credit card in your name,- the business expenses would then appear on a seperate statement and you could either pay the bill or give her the money ( obtaining a receipt of course ).

Not unless she applies for a separate credit card: if she just adds the OP to her current card then it'll all be on the one statement.

amcg100 wrote: »

The only drawback for your GF is that if you go bust or fall out etc, she will be liable for the oustanding balance.

Very true.

feygan wrote: »

With that in mind will me being an additional card holder not qualify us as having a joint credit card or not?

Finally should that still be legal will asking for an extra card holder require a credit search to be made? I don't have any because I know I have a low rating, so I try to never get checks done that involve her so as to not damage her rating on checks that will likely get turned down due to me.

I don't know whether being an additional card holder makes it a joint card, in fact - DH and I each have one of our sons on one of our credit cards, and neither has been able to get a card in their own names. But I don't think a credit check is carried out - possibly it would for a new card, but not for adding someone. Best way to find out would be to ask.

However, also take a look at Martin's article on Bad Credit Credit Cards and see if you can improve your credit rating and get your own card. And also ask your bank about a credit card for the business: doubt if you'd get cashback, but it might help the cashflow!

Mistral001

feygan wrote: »

Quick background first. I have just started as a sole trader and my girlfriend has recently been made redundant and now is on JSA. Due to a low credit score I have no credit/store cards of any kind and just a debit card for my personal account and one for the business. My girlfriend does have a credit card which she gets cashback on.

You seem to have two bank accounts. Perhaps investigate electronic payment from your bank account to the suppliers or pay by just plain old cheque. Could your GF lend you the money if you are short of funds in the accounts and you pay her back when the stock is sold. I know perhaps not an ideal situation but that way the GF is protected as far as explanations to JSA people go .

Pennywise

feygan wrote: »

So just to be 100% provided the invoices are all correctly in mine and my company name

So, the invoices are in your name, at your address?

Some suppliers and their card processors wouldn't let these be paid by a cardholder with a different name at a different address - they'd be rightly concerned about fraud - a lot of retailers and suppliers insist on the goods being delivered, invoices raised, and payment card name and addresses all matching properly.

If all you're wanting to do is get the rewards points on her card, then you're going to a whole lot of trouble and stress for very little reward.

Why not just pay for the goods using the debit card you say you have and keep it simple?