A reader has two credit cards for two different works services and wants to know how to determine what to charge to each card.
Q: I am in office-based private practice as a medical corporation. I take a salary and receive a W-2 at year's end. I also do some outside consulting for which I receive 1099s. I have a different credit card for each entity.
On occasion, my hotel bill or meals may not be fully reimbursed. Am I better off charging these on the corporate card, or using the consulting card and calling them an un-reimbursed business expense?
A: Additional facts are needed to fully answer the questions posed. This answer assumes that the medical corporation is a “C” corporation and that your consulting business is a single member LLC.
The reason you have different legal entities for different ventures is to minimize your exposure and limit your liability. This said, you must maintain a separate accounting for each venture and not co-mingle income or expenses. Thus, the best advice is to charge the medical corporation bills on the corporate card and the consulting bills on the consulting credit card.
Assuming you are the sole owner of both business ventures it should make no difference in your taxes since all net income eventually winds up on your individual income tax return.
Remember, this answer starts with fact pattern assumptions. Different facts may result in a different answer.
Boyle Henderson, CPA, is an owner of Daenen Henderson & Company in Alexandria, LA.