Business Card Uncertainty

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mattymatt808
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Business Card Uncertainty

Postby mattymatt808 » Thu Jul 18, 2013 8:02 pm

Aloha all, I am going to buy a new car soon and I am also in the process of getting a Chase Ink Bold card for my small business. I would like to use the business card for the down payment to get the signup bonus, but I'm afraid that somehow this will make the car belong partially to my LLC instead of myself. Would this be the case or am I just being paranoid?
$2500 First Hawaiian Bank (6/10)
$4500 CHASE Freedom (2/13)
$3500 Citi Forward (2/13)
$2000 Discover it (2/13)
$9600 AMEX BCE (3/13)
$10000 CHASE Sapphire Preferred (7/13)
$5000 CHASE Ink Plus (8/13)


MB131174
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Postby MB131174 » Thu Jul 18, 2013 8:28 pm

The car would not belong to the LLC unless you registered it as such. However, I discourage using a business card for personal expenses. I use my business card for business purposes only, and personal cards for personal expenses only. You could save yourself a lot of headaches by sticking to that rule. I chose the mileage route vs actual car expenses when starting my business. That way I can use my personal cards for gas (5% or 3%, depending on category rotation) but still claim the federal per mile write off when driven for business purposes.
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mattymatt808
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Postby mattymatt808 » Fri Jul 19, 2013 6:10 am

Thanks for your thoughtful response. However, the depreciation/expense method (especially with the special depreciation allowance still in effect this year) will work better for me since a large percentage of it will be business related and mileage doesn't add up very much on my tiny island. Would it really cause that much trouble for me down the line to just charge a $5000 down payment on my business card and immediately reimburse my LLC?
$2500 First Hawaiian Bank (6/10)
$4500 CHASE Freedom (2/13)
$3500 Citi Forward (2/13)
$2000 Discover it (2/13)
$9600 AMEX BCE (3/13)
$10000 CHASE Sapphire Preferred (7/13)
$5000 CHASE Ink Plus (8/13)

MB131174
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Posts: 512
Joined: Mon Mar 05, 2012 10:58 am
Location: PA

Postby MB131174 » Fri Jul 19, 2013 9:31 am

It can be done, yes. You just have to be prepared to explain things to your accountant. Me, I pay my rent with my business AmEx card because I can write off a certain percentage of the rent. I also pay my cable bill, electric bill and cellphone bill (they are in my personal name, not business) with my business card. Now with that said, I have both my business and personal checking accounts linked to that card for payment. Whatever portion I'm expensing out I pay with business checking, the rest comes out of my personal checking. I know I'm contradicting myself here, but the fact is that a portion of those bills are true business expenses so I see no issue using my business card. What kind of business did you start? http://www.barronertravel.com is my business.
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mattymatt808
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Location: Honolulu, HI

Postby mattymatt808 » Fri Jul 19, 2013 3:38 pm

http://streetlightcadence.bandcamp.com/ (I'm the darker guy in the "portrait")
We've been gigging regularly for the last year, and after correcting so many checks written to our band name we figured we should just register so we could exist as an entity and have a checking account. The business deductions will work to my advantage because although I would naturally be using the car personally too, the gigs really do add up to over 50% of my mileage since I work so close to home. I'd be fine without going through all this accounting hassle, but if I can get 50000 UR points in the process it's worth it to me. I do my best to defy stereotypes by being a financially literate musician :)
$2500 First Hawaiian Bank (6/10)
$4500 CHASE Freedom (2/13)
$3500 Citi Forward (2/13)
$2000 Discover it (2/13)
$9600 AMEX BCE (3/13)
$10000 CHASE Sapphire Preferred (7/13)
$5000 CHASE Ink Plus (8/13)

s.jessica
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Location: Iowa

Postby s.jessica » Fri Jul 19, 2013 7:13 pm

The LLC separates the business from the person and if someone sues your business, your personal assets are protected. When someone with an LLC uses a business account for personal use, it is known as "piercing the corporate veil". This is something lawyers look for to legally tie you to the business. The big problem would only be if someone were to take legal action against your company, in which case if it can be proven you were making personal purchases with a business account, your LLC protection becomes worthless.

It's a little different than in the case of a sole proprietorship where the business card is yours and you are personally responsible for the bill. Now as far as the car being partly owned by the LLC, no, the LLC won't partly own your car, ownership of a vehicle is determined by the title. For taxes, you could put all expenses on one account then highlight all your deductable business expenses but then your accountant sees all your personal expenses as well which is what most people with business accounts try to avoid.

In other words, in the case of an LLC, I would stay away form using a business account for personal purchases because you want as much separation as possible between you and the business.

mattymatt808
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Posts: 60
Joined: Tue Feb 12, 2013 5:10 pm
Location: Honolulu, HI

Postby mattymatt808 » Fri Jul 19, 2013 9:20 pm

Very informative, thank you. I think you both have convinced me!
$2500 First Hawaiian Bank (6/10)
$4500 CHASE Freedom (2/13)
$3500 Citi Forward (2/13)
$2000 Discover it (2/13)
$9600 AMEX BCE (3/13)
$10000 CHASE Sapphire Preferred (7/13)
$5000 CHASE Ink Plus (8/13)



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