One of the first things you are told when setting up a business is to separate your personal and business expenses. This applies both to bank accounts and credit cards. It’s important not just because it makes bookkeeping easier but also because it saves time when it comes to filing your tax return.
There was a time when the company’s petty cash box was used for purchases like tea and biscuits for the office. Nowadays most of these incidental purchases are paid for by card or contactless payment but you still need to keep the receipts for your bookkeeping records.
Prepaid company cards
Nobody enjoys having to track down missing receipts or trawl through statements trying to separate out business from personal expenses. Eliminating this task is one of the advantages of using prepaid company cards. They not only make it easy to control spending, they also come with APIs that enable you to integrate expenses into your bookkeeping records. Some even come with apps that enable you to set a budget and capture receipts digitally—a great time-saver. Examples include the Pleo Employee Business Expense Card and the Soldo Prepaid Company Card.
Provided your employees only use the company card for business purposes, this is not a Benefit in Kind (BIK). However, if they use the card for private purchases and don’t repay you for the cost of these purchases, Revenue regard this as a Benefit-in-Kind.
Keep business and personal expenses separate
There are also Revenue rules regarding the separation of business and personal expenses. This is why we always stress the importance of not using a personal card for business expenses. Mixing up business and personal purchases creates time-consuming administrative headaches from a bookkeeping and tax perspective.
Enhanced reporting requirements
Another important point to keep in mind is that, as discussed in Nikki’s September article on reportable benefits, under new rules coming into effect in January 2024, it is now mandatory to submit a report to Revenue when you pay certain employee expenses and benefits. (See Nikki’s article for details).
If you are a GroForth client, and need help on separating business and personal expenses, our team will be happy to point you in the right direction. The best way to raise your query is to message us via our contact form.