Using personal c-card to buy equipment for business.

SANDYLODGE

Morning all,

My OH is about to start a business in the next month. She has applied for a business account but as this is not up and running yet and she needs to start buying equipment we have used our personal credit card.

My question is do I just get her to write a cheque from the business account when it's set up to pay off these items on the c-card.
If this is the right way to do it then is there anything wrong with doing this in the future, i.e. using our personal c-card to buy things for the business (tools, fuel, stationary etc.) and then spliting those items off when the statement comes? The c-card always gets payed off straight away as we only use it to get extra Tesso points, not for the credit.


Thanks for any advice.

Dave.

fguk

Hi

You can do that, no problem. Keeping good records is the key. If you think about it, its not much different to an employee using his cc card and then claiming on expenses....

We did this before we had everything setup, but in the end I think it is easier, and clearer, to have a company cc. That way records are easier to keep and things are much simplified should a tax/vat man enquire.

Snow_Dog

The advantages of doing it this way are:-

1 If you have an incentive on your credit card, eg airmiles you are gaining.

2. Most importantly you are getting better fraud protection and a whole host of other protection that you do not get with company credit cards.

Company credit cards are a bit of a rip off really, the protection is usually not so good (its not an individual consumer being protected) and they all charge annual fees.

Nope, its just straightforward, pay on your personal CC then pay yourself back from the company account. Keep the record straight and there shouldn't be any comeback.

SANDYLODGE

Thanks for that fguk and Snow Dog. I think we'll carry on doing it that way then.
So when I do the books and record the cheque going out of the business account to pay the credit card do I just record it as say '£500 to pay credit card' or do I need to split it down into each item that was purchased?

Snow_Dog

It depends on how you want to show it in your accounts, its really up to you, the main thing is documentary evidence that will show you are paying for legitimate business supplies/equipment.

If you are going to be making a lot of CC purchases this way I would suggest to make it simple would be to have a personal CC that you use solely for the business expenditure, that way its one payment from the business account per month and the CC bill goes into the company records.

The nice thing about this also is if you haven't got free banking with the business account then you are minimising your bank charges too as well as getting the interest free period before having to pay it off.

windswept

I agree. we use a 0% cc for all business purchases like stock etc.
It is a good way of getting a discount from suppliers too, for paying up front, rather than on account.;)

Debt_Free_Chick

SANDYLODGE wrote: »

Thanks for that fguk and Snow Dog. I think we'll carry on doing it that way then.
So when I do the books and record the cheque going out of the business account to pay the credit card do I just record it as say '£500 to pay credit card' or do I need to split it down into each item that was purchased?

To keep it easy, I would simply record the reimbursement as if the business had bought the goods directly. So if a payment of £500 was, eg, £200 for stationery and £300 for a new desk, I would put it through the accounts split that way. This way the accounts would show that the business has spent £200 on stationery and £300 on a new desk - and not "£500 expense reimbursement" as this would not describe what the business actually bought.

The alternative is for you to invoice the company, showing the split, and then simply pay the invoice. Probably "more correct" but an unnecessary refinement, IMHO.

robert_harper_2000

Thought I had posted this but...
.. what about perks Cashback, airmiles etc - would these have to be declared?

SANDYLODGE

Just a quick question to get this straight in my head.
I'm not sure when I need to record the things that I have bought on the personal credit card in my accounts book.
I've just had the first of my personal credit card bills which also has business items on it.
And I have paid myself a cheque from the business account to cover these items.
I'm going to break the cheque payment down into the different categories of thing that were bought e.g. £10 stationary, £50 chair, £15 boxes.
What I'm not sure about is under which week do I put these expenses, should it be the week that I bought the item on the personal credit card or the week when I wrote the business check, because in theory the business isn't actulay buying the items until the business cheque goes out.

Hope that all makes sense.

Thanks

Snow_Dog

I would enter it as the date the business paid you back, that way all of the entries would stay lumped together as its all done out of the business account as one single payment.