Ndubuisi Egwim warns directors that company cards are not personal accounts. Personal expenses paid by the company get reclassified as salary, taxable benefits, or director's loans. An allowable expense needs a genuine business purpose, must be wholly for the business, and must be reasonable in amount.
Mistake number 6, mixing personal spending with genuine business expenses. Now, this is one of the most common mistakes new company directors make. A company bank card is not a second personal current account. That sounds obvious, and I'll show you why. Okay. It's not a personal, but company spending and personal spending can become blurred very quickly. A laptop genuinely required for the company may be a legitimate business expense. A mobile phone contract held by the company can be treated differently from the company paying your personal phone bill. Now, home working equipment also have specific rules around them. Travel must be genuinely business related. Entertainment has restrictions and clothing is often misunderstood. And when the company pays a private expense, that payment may need to be treated as salary, taxable benefit, or a director's loan rather than an ordinary business expense. So you have to understand what is allowable. The test is not, can I pay for this with my business card. No, it's— maybe I'm going to pay for that, but your question will be, what is the business purpose? Can you— is this really a business expense? Is it allowable? Is it wholly exclusively for your business? And is it reasonable?
