How Do I Categorize Business Expenses on a Personal Credit Card?
You can still deduct business expenses paid with a personal card. The IRS cares whether the expense was legitimate and business-related, not which piece of plastic you used. But you need to record them correctly so your books make sense and your deductions are documented.
In your accounting software, record each business expense individually with the appropriate category. Office supplies go to office supplies. Software subscriptions go to software. Meals with clients go to meals and entertainment. The category determines where it lands on your tax return, so get this right.
The tricky part is the other side of the entry. When you pay from a business bank account, the expense reduces your cash. When you pay from a personal card, the business didn’t actually pay anything yet. You personally covered a business cost, which means the business owes you.
In QuickBooks, record these as expenses paid from an equity account, typically called Owner Investment, Owner Contribution, or Due to Owner. This reflects reality: you put personal money toward a business expense, and that contribution increases your equity in the business. When the business reimburses you later, that payment reduces the equity account balance.
If you never reimburse yourself, that’s fine too. The expense still counts. It just stays as part of your owner contribution. At year end, the equity account reflects all the personal funds you’ve put into the business, including expenses you covered personally.
Go through your personal card statement monthly and pull out the business transactions. Waiting until year end means sorting through twelve months of mixed purchases trying to remember what was business and what was personal. Monthly takes fifteen minutes. Annually takes hours and you’ll miss things.
Keep documentation. Save receipts or at least note what each purchase was for. A $47.52 charge at Amazon could be anything. You need to know it was printer ink for the office, not a birthday gift for your nephew. If you’re ever audited, “I think that was business-related” doesn’t hold up.
The cleaner solution is separating cards entirely. A dedicated business credit card means every transaction on it is business by default. No sorting required. Bank feeds pull directly into your accounting software. Monthly bookkeeping gets simpler because the categorization is straightforward.
If you’re going to keep mixing personal and business on one card, at least be consistent about recording the business portion. Set a weekly or monthly time to review the statement and enter transactions. The expense categories stay the same whether the purchase came from a business card or a personal one. What changes is how you record the payment side.
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