You were at the store, the business card was the one in your hand, and now a personal purchase is sitting in your business account. It happens. The fix is small, as long as it gets handled the right way.
Leaving it there is the real mistake
The one thing to avoid is letting it sit and hoping nobody notices. Nobody will, and that’s the problem. A personal charge hiding in your expenses is the kind of thing that makes this bee grumpy. Once it gets categorized as a normal business expense, your reports show less profit than you made, and the purchase can end up in your deductions.
The IRS is clear on this one. Publication 334 says a business expense has to be “ordinary and necessary” to be deductible, and that you “can’t deduct your own salary or any personal withdrawals you make from your business.”
Let your bookkeeper know
If you work with me, I’ll usually spot these when they come through the bank feed and ask you about them. A quick text or email when it happens saves us both the back and forth. All I need is the date, the amount, and that it was personal.
If you do your own books, type a note in the memo on that transaction the same day. Three weeks from now you won’t remember what a $42 charge was.
How it gets recorded
For a single-owner LLC, a personal purchase on the business card gets recorded as an owner draw. That’s money you took out of the business for yourself, which is what happened. It stays out of your expenses, so your profit stays accurate.
Some owners would like to pay the business back. That works too. Move the money from your personal account to the business account, and it gets recorded as an owner contribution.
If your LLC has more than one owner, or you elected to be taxed as an S corporation, this can work differently. Ask your tax preparer how they want it handled.
When it goes the other way
Sometimes a business purchase lands on your personal card. Keep the receipt and snap a photo of it in the QuickBooks mobile app. It gets recorded as an owner contribution, money you put into the business, so the expense still shows up in your books.
If it keeps happening
A couple of these a year is normal. If it’s every week, the two cards are too easy to mix up. Keeping the business card out of your everyday wallet helps. If your business and personal spending share one account entirely, that’s a bigger job, and I wrote about what one account costs you separately.
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