Company credit card

[paulinag]

Welcome
I have on quick question .... I am trying to enter credit card statement to the accounting system. credit card is used by wife of the owner and she is one of the directors in a company.... most of her spending are for cloths and stuff so I treat them as a expenses out of the scope... I have enter them as a UK entertainment with T9 tax code. She withdraw some money from account, but I've been told that this have been used to pay some bills for business... so I will transfer all withdrawals form credit card account to the petty cash account...

What I am looking for Is extra opinion about what I mention before..am I doing this correctly ... ???
Thank you so much for your help ...

 

[ColinCPA]

NO, you are creating big problems with this arrangement. You should not be commingling personal expenses with business expenses on the company credit card, especially since you don't seem to have a clear accounting of what is personal vs. what is business.

The credit charges for your employee's personal expenses constitute a nonaccountable plan and represent taxable wages to her like a bonus (unless de minimis), also subject to FICA and Medicare, because she is receiving a benefit. Also, if she is not substantiating any of her business expenditures on the card with adequate support and/or returning any excess amounts within a reasonable period of time then those expenses are also considered taxable under a nonaccountable plan.

You should get an accountant and straighten this out.