Corp Credit Card

[Taxman]

I have a client who has an S-Corp and uses a Corp credit card to charge everything for his auto expenses (gas, repairs etc.). I told him he needs to put in place an accountable plan. I know if he were to use his own personal credit card he would need to fill out an expense report to get reimbursed under an accountable plan. How is it handled with a Corp Credit card?

[BOB W]

For the most..........

........... it is the same as a check, which it will be when the payment is made. The usual due diligence needs to be done, as with any check, to isolate any personal expenses.

[OldJack]

Auto Benefit added to W2

There is no reason a corporation can't have and use a credit card for business purchases, even if the corp does not own the mentioned auto. However, the officer's must NOT use the credit card for personal purchases or it becomes a real accounting problem unless there is bookkeeper that knows how to keep track of things. Credit card statement should be reviewed, documented as to business purpose, and signed approved by the officer before payment.

Corp book entry is for debit to auto expense and credit to credit card payable.

If the corp owns the auto the Officer/shareholder should have the auto benefit added, for personal miles, to his W2 by calculating the annual lease value from the IRS table plus .05 cents per personal mile gas benefit.

If the Officer/shareholder owns the auto he should then have the personal miles auto gas benefit added to his W2 which would be company paid gas at .05 cents per mile. Entry is to debit W2 benefit and credit auto expense.

[Taxman]

Thanks

for the responses. If a company is currently paying all expenses with a corp credit card is there still a need for an accountable plan?

[OldJack]

Who, What, Where, When, and Why?

Accountable plan is not necessary as there is no reimbursement to an employee. The thing important here is proper proof of business expense the same as any other business expense. ie: Who, What, Where, When, and Why?