OK to use credit card from my defunct business for my current business?

July 7, 2022 8:56 AM

Are there any consequences for using a work credit card for a defunct business to charge expenses for another business?

I'm the sole owner/employee of a S-Corporation which began operations in January. We're currently unable to get a business credit card due to a typo on the address on our EIN form; we updated our info with the IRS but haven't received written confirmation yet due to their work backlog.

I have a credit card still open in my name from my old S-Corporation. I shut down the old corporation with the relevant state/local folks at the end of 2021.

Right now I'm putting business expenses for the S-Corp on my personal card, which is becoming a pain in the butt for bookkeeping/expenses.

Are there any possible tax or legal consequences to using the old credit card for the defunct business, or is it okay as long as I keep current on payments for the credit card + keep track of expenses?

posted by allthethings to Work & Money (4 answers total)

I'd call the card provider. It might be as simple as registering a DBA, although you might have to abandon the new S-corp in that case.
posted by rikschell at 9:03 AM on July 7, 2022

Another option would be to see if you can get a second card on your personal account to use for business. Often used by parents for kids it is handled like a single account but the bill breaks out charges by card. Would make the expense tracking/book keeping easier.
posted by Mitheral at 2:30 PM on July 7, 2022

I've been using a credit card from a defunct business that I owned some years ago for personal stuff for four years now. During the time I used it for the business, it was used 100% for business purchases and I paid the bill with corporate funds. After I closed and dissolved the business (with a zero balance on the card) I began using the card for personal purchases and pay the bill with personal funds. No one seems to care. (I just happen to like the rewards perks of this card was too lazy to apply for a new one. Since there was no co-mingling of business and personal funds & purchases, and I signed a personal guarantee for the card when I got it, it seems fully defensible if anyone ever starts caring about it.) So, you're probably OK, but I'm not an accountant or lawyer.
posted by Larry David Syndrome at 4:00 PM on July 7, 2022

I would expect the card agreement between the provider and the now defunct company requires that the provider is informed if the company ceases to exist to close the account. I have no idea if their fraud people ever cross reference company filings for their existing accounts/how likely it is that they figure out the company no longer exists. But if they do figure it out, they will probably just cancel the card with immediate effect leaving you without card. Irrespective of the tax and legal implications, there is a business risk here for your new enterprise.

2nding the suggestion to get a second personal card to use solely for corporate stuff until I could sort out the paperwork for a new corporate card. I'd probably stop using that card after getting a new corporate card but keep it open as backup for both my primary personal card and the corporate card.
posted by koahiatamadl at 2:06 AM on July 8, 2022