S Corp and Credit Card

[JG EA]

I have a question:
Shareholder pays for a regular monthly company expense with a new credit card in the shareholders name. He wanted to have the company pay the monthly credit card bills and I advised NO. I recommended a reimbursement check to him. He will do it that way.

My question is is there any danger is such a procedure (the regularity of it)?

[dsi]

My advice to all of my s-corps has been for the s-corp to pay its own debts. I never did trust the reimbursement process.

[Gretel]

One thing is the perfect situation, which would the S-Corp pay it's own debt. But then there is real life.

I have more than one client who could credit cards only in his name. So, what do you do, what can the IRS do? If the biz has to close, due to not be able to secure credit, IRS doesn't get any tax dollars at all.So we try to make the best out of the situation. Well, I do and use the same approach that was suggested.

[ChEAr$]

Just this morning I went over to Office depot for some office supplies, but had forgotten to take the corporate credit card. (It's an S corporation, but the card bears my name on it even though the bill comes to the corporation name and address.)

So I had to use personal credit card and remember to credit my shareholder's loan account on Monday. That is my reimbursement mechanism.

At year's end the temporary loan account is closed out into distributions, and thus a reduction of retained earnings.

[JG EA]

Thanks all for your replies. C - do you think loan is a better way to go? On such a regular expense?

A point to keep in mind is there is no business reason for this. The company has plenty of money. It's a matter of convenience.

[ChEAr$]

Thanks all for your replies. C - do you think loan is a better way to go? On such a regular expense?

A point to keep in mind is there is no business reason for this. The company has plenty of money. It's a matter of convenience.

If I am "C", .... then ... the best way is for corporation to adopt an accountable plan,
authorizing reimbursement to employees (employees; not corporate officers who may also be employees) for expenses incurred for the corporation.