Do I Really Need Separate Credit Cards For My Business And Personal Expenses?

by Debi Enders

The short answer is yes, you really do.

Like orange juice and toothpaste, personal and business finances don’t mix well. One of the easiest ways to draw a clear line between your personal and business expenses is to open a separate credit card account for each. Separating business and personal credit cards will not only reduce the potential for problems but also make it simpler to manage your finances.

Consider these benefits:

A separate business card can improve your business credit profile. Presuming you pay it off on time, a business credit card can help boost your borrowing power when you need a small-business loan. A good credit record could also make you eligible for lower interest rates while demonstrating the legitimacy of your small business.

It can protect your personal credit too. Most business credit card transactions won’t appear on your personal credit report unless you default. Also, having separate accounts means you will not need to finance business transactions on — and risk maxing out — your personal card. Reaching your personal credit card limit not only restricts your spending but also can hurt your personal credit score.

It can help at tax time. Many credit card providers make it easy to create customized reports that track your business expenses by category. Many of these expenses are tax-deductible.

These separate, itemized statements will make completing your tax returns easier for your accountant.

In short, it can be a pain to ask a cashier to separate business and personal transactions at the cash register. But looking down the road, you’ll see that maintaining separate credit card accounts will save you time and give you peace of mind. Not only will they result in a clean financial record, but they’ll also save you from countless headaches as your company grows.

Debi Enders (debi.enders@commercebank.com) is
vice president, small business banking at
Commerce Bank.