Not too long ago, I received a question from a reader. She wanted to know if it is possible to use profits from a business she owns with her husband to pay off a personal credit card. As always, when it comes to this legalese business-y stuff, I recommend getting more professional advice in such areas, such as going to business attorney, or consulting an accountant. But I also have my own ideas on this topic, which I will share, and which I shared with her.
It’s your money, isn’t it?
For most people who own their own businesses, especially small, home-based businesses, the profits simply go to, well, the owners. This means that business profits (after all employees have been paid and business expenses taken care of) can be transferred into part of the owner’s personal wealth. And once it is personal wealth, then it can be used for personal things. Like paying off personal business cards. Just remember that this is personal stuff, so you can’t deduct your personal credit card payment as a business expense, and you can’t count it as pre-tax.
In some cases, businesses are set up so that some of the profits are specifically earmarked for other things. Make sure that you know that your business profits belong to you before taking them to pay for personal expenses.