Is using a company credit card for personal use embezzlement?

In December 2025, a Florida woman was arrested for allegedly embezzling from the air conditioning firm where she was hired to oversee payroll, accounting and HR. The woman allegedly used company funds to pay over half a million dollars toward her personal credit card, with more than $375,000 of those funds recorded in company books as business expenses tied to an owner’s card.

That same week, three suspects were arrested in Kentucky and charged with felony counts of embezzlement over $100,000, embezzlement involving a credit card, and accessing a computer to defraud. Among the allegations: One of the suspects used company credit cards to make more than $18,000 in unauthorized personal purchases.

And earlier in the year, a Martin County, Florida jury convicted a woman of grand theft when she used a company credit card issued by her employer (a medical practice) to make more than 3,000 personal purchases on Amazon. 

These are just a few examples of fraud and embezzlement cases involving company funds and credit cards. 

Here’s what you need to know about the risks of using business credit cards for personal purchases.

This article is for informational purposes only and should not be considered legal or tax advice. Please consult a licensed attorney or tax professional for advice specific to your situation.

Is using a company credit card for personal use embezzlement?

“The difference between theft and embezzlement can hinge on the scope of a person’s authority or intent,” says Mario Serralta ,CPA, a Miami-area lawyer and founder of  Mario Serralta & Associates.

The U.S. Department of Justice defines embezzlement as the fraudulent taking of property by someone who was entrusted with it. Under their definition, four conditions must be met for embezzlement: 

1. You have the trust of or a fiduciary relationship with your employer.
2. You gained access to the property through your position.
3. You used it for your own benefit.
4. You intended to deprive the rightful owner of it.

When it's not embezzlement (sole proprietors, single member LLCs or S corp owners)

If you're the sole owner of your business, you can't really embezzle from yourself.

You own the business, so you're not taking from someone else or violating a fiduciary duty. That said, just because it's not embezzlement doesn't mean it's smart — more on that in a moment.

(As a sole business owner, you can defraud a credit card company by making purchases you have no ability or intention to pay.)

When it could be embezzlement (multiple owners or employees)

Things can get more serious if your business has multiple owners or if you give an employee access to a company business credit card. The person using the card is getting access to funds that at least partially belong to others (co-owners or the employer). Those owners could pursue legal action if the business credit card is misused.

“When the employee is given the credit card, and uses it for his or her own purpose, they have basically taken money borrowed by the employer (a credit card is an unsecured loan) and used that money for their own purposes” notes Harold M. Goldner, Esq., principal at Friedman Schuman Layser, a firm focused on employment law and business matters.  

Ideally, employees shouldn’t use business cards for personal purchases, but if it happens, the funds should be paid back to the business quickly. 

Can I use my business credit card for personal use?

Using a business credit card for personal purchases can cause problems down the road, even if you are a business owner operating as a sole proprietor. 

Tax implications of mixing personal and business expenses

Tax season can be especially painful if you've mixed personal and business purchases.

You'll need to sort through each transaction to determine what qualifies as a business expense. 

“If you are the business owner and you use your business card for a personal purchase, you shouldn’t deduct (the expense),” says Seth Kamens, CPA, MBA and managing member of Kamens & Associates, a New York-area financial services company. “If it’s not business applicable, it should just be a distribution.” 

The real problem from an accounting perspective, he says, is taking deductions when you shouldn’t. “As long as you don’t deduct it, it’s no harm no foul,” he says. 

Carrying a balance can complicate things significantly. You can typically deduct credit card interest for business-related transactions, but not for personal debt. Calculating the split between business and personal interest may prove so difficult that you give up what could otherwise be a legitimate tax deduction. 

The same is true of annual fees. If you use your card exclusively for business purchases, you likely can deduct the annual fee, but when you use that card for both types of expenses, you may reduce or lose out on that deductible expense. 

Card agreement violations and account closure risk

Your card issuer likely states that you may use your business credit cards for business purchases only. 

Take the Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® credit card as an example. When you apply, the terms state that you agree “that the accounts will be used for business purposes only”. 

You’ll see similar language in other small business and corporate card terms and conditions.  

In reality, issuers aren’t likely to question individual purchases, but if you run up a large balance or make a series of suspicious purchases, your account could be flagged and closed. If it is closed, you may forfeit any rewards you have earned. 

And if you can’t repay your balance, personal use of the card could potentially lead to the issuer trying to collect unpaid debt from you personally, even if the card didn’t require a personal guarantee. 

Is it illegal to use a business account for personal use?

If you use your business bank account or credit card for personal use, that use may or may not fall into the categories of fraud or embezzlement, depending on the facts and circumstances of the situation. 

“When personal purchases are mixed with legitimate business expenses on the business credit card, an immediate liability for legal and financial problems is created by creating a paper trail that either auditors, prosecutors, or plaintiff attorneys may interpret as a misuse of corporate assets or as theft of those assets,” says David Weisselberger, the founding partner and expungement attorney at Erase The Case, a Florida law firm that helps people clear criminal records. 

“I have seen people go through many months of legal difficulties over charges of less than $300,” he says, “and there has been one common denominator among all of them:  A lack of clearly defined rules at the business level about what the business credit card was intended to pay.”

As a sole owner, it’s easy to use your business bank account or credit card for personal expenses, and it’s rare for banks or card issuers to question your purchases unless your spending triggers a review for potentially fraudulent use. 

If you've formed an LLC or corporation, though, you have formed a business entity that is legally separate from you as an individual.  Mixing personal and business expenses can open the doors for creditors to “pierce the corporate veil” or, in other words, put that legal separation in jeopardy. (An S corporation is a tax status you can choose if you form an LLC or corporation.) 

Consequences of using company cards for personal expenses

Even when it may not be illegal, mixing personal and business use on company cards can still create serious financial, tax, and reputational risks.. Here are some of those risks:

IRS audit risk

Messy records and deductions that are out of line for that of similar businesses can attract IRS attention. It can either trigger an audit, and if you are audited, result in the denial of deductions. 

The IRS may question whether you're properly categorizing expenses. An audit means proving every deduction with documentation. If you can't show the business purpose of expenses, you could lose legitimate deductions and/or face penalties.

Loss of liability protection

There are lots of reasons for forming a business entity, but one of the main ones is for personal liability protection. 

That protection depends on treating your business as a separate entity. Use company funds for personal expenses regularly, and a court could decide you're not really running a separate business. Anyone who sues your business for an accident, unpaid debt, or business dispute, may be able to pierce the corporate veil, making your personal assets fair game for business debts and lawsuits.

Credit score impact

Most small business credit cards report to business credit bureaus, and only a few report to personal credit. That can help protect your personal credit by keeping business debt where it belongs: on your business credit. 

Whether it’s business or personal credit, high balances (often referred to as “high utilization”) may hurt your credit scores.  

And, of course, missing payments can lead to lower credit scores. Paying on time is essential for establishing business credit and building strong credit scores. 

Professional consequences

Business partners who discover you're mixing personal and business expenses may question your financial management. That doubt can derail deals or partnerships.

Goldner says he’s seen problems arise from business partners who share the same business credit card, then accuse each other of misspending. “I represented a dentist in a two-person practice where I expected if the two were left alone long enough, they would have gone after each other with their drills,” he says. “We had to go to court to dissolve the corporate entity and resolve the various bills the practice had incurred.”

For employees with company card access, the stakes are higher. Personal use of corporate credit cards can lead to termination and criminal charges. Even if your employer doesn't press charges, having "misuse of company funds" on your record makes finding new employment difficult.

Best practices for keeping personal and business accounts separate

Drawing a clear line between personal and business finances can help protect you and your business, and make your financial life a little easier. Here are strategies you can use to make that happen:

Set up separate accounts

Start with the basics: use business accounts when possible.

Open a business checking account and get a business credit card. Use these exclusively for company expenses — office rent, supplies, client meals, software subscription, etc. If you need money from your business to pay personal expenses, pay yourself and then pay those personal bills from your personal accounts. 

“It is not always possible to get a business credit card,” notes Michael McCready, managing partner of McCreadyLaw, a personal injury law firm based in the Midwest. When he started his business, he says, it was with a personal card he used for business expenses. But that can cause issues with your personal credit scores or applying for a mortgage, he points out.

Do you have low credit scores? Read Nav’s guide to credit cards for bad credit. 

Pay yourself properly

Decide how to pay yourself as a business owner. For many business owners, this will be a combination of a regular salary and/or periodic owner draws. This creates a clean paper trail and makes tax reporting more straightforward. 

If your business operates as a sole proprietorship, formal payroll is not necessary, but getting in the habit of paying yourself first can be key to creating a business that provides for your financial needs in the long run.  

Keep good records

Keep receipts for every business expense, and make sure employees who use company cards do the same. 

Store them in a dedicated file or use accounting software to track them digitally. When you review your business credit card statement, you should be able to match each charge to a business purpose.

Know what the IRS considers a legitimate business expense. If you're unsure, work with a tax professional. The cost of their guidance is far less than the penalty for getting it wrong.

Decide how to handle shared-use items

Some expenses genuinely split between business and personal use.

Your cellphone might be the obvious example. You use it for client calls and personal calls. Your vehicle might serve both purposes. For a home office, you're using space in your residence for business.

Work with your accounting professional to determine the best way to handle these expenses. Some general guidance includes:

• When using your vehicle for business, you may choose between logging your business miles and taking the standard mileage rate, or actual expenses. 
• If you use your cell phone for work and personal use, you may need to track business use. 
• Qualified home office use may allow you to deduct actual prorated expenses, or use a simplified method with a standard deduction. 

Communicate with your team

Talk to everyone who needs to know about your financial policies and boundaries and develop written guidelines. 

If you have business partners, make sure everyone follows the same rules. If you're married, ensure your spouse understands which cards are for business only. If employees have company cards, establish clear policies about acceptable use. Getting everyone on the same page prevents accidental violations and awkward conversations later.

“My experience is people are more sloppy than (intending to) defraud,” McCready says. But if there is misuse, he urges the business owner to handle it immediately. “If (there is) any suspicion of fraud, you must remove access to the card and/or terminate the employee,” he advises. “You own a business, you cannot afford financial mismanagement. This is your money.” 

Review expenses regularly

“One lesson I’ve learned as a mediator of these disputes is that you can stop most problems before they start by reviewing card statements briefly each month — it only takes a few minutes to look at receipts and descriptions. It improves communication and accountability, and further protects the financial future of your business,” says Serralta.

Most employee embezzlement cases take place over months and even years. Had business owners been more involved in the financial aspects of their business, they may have caught it sooner. 

“Liability can be minimized when business owners limit the number of users on their credit cards, establish written rules regarding permissible expenses that cannot be subjectively interpreted, and routinely review their statements every thirty days with the same scrutiny they would apply to any other legally binding document,” says Weisselberger.

What to do if you've already mixed personal and business expenses

Even with the best of intentions, mistakes happen. I have the same credit card in both business and personal versions, and I’ve accidentally used the wrong one on occasion. And when I have used my Apple Wallet to pay for purchases, I’ve picked the wrong card a few times. 

Steps to untangle your finances

For bookkeeping purposes, you need to correctly identify charges as business or personal expenses to take proper tax deductions. If you haven’t done that, don’t wait until tax time when you’re under the additional stress of a deadline. 

It’s “best if the owner absolutely has to use a company card for personal use to show it in the books as a loan and ensure that the owner repays that loan from the owner’s own, non-business, funds,” Goldner suggests. “The only exception would be a sole proprietor who is actually the alter-ego of the entity, and is not perceived as any different (from the entity).”

Talk to your accountant about the best way to handle personal purchases charged to your business card or run through your business account. (You may need to categorize them as owners draw in your accounting software, and ask about whether you need to reimburse the business with personal funds.)

If you have employees with access to business accounts, make sure you have systems in place to detect fraudulent use. 

Some online influencers make it sound like you can write-off everything for your business, and easily get your tax liability to zero. Those claims are often exaggerated or even false. If you’ve already filed tax returns with improperly categorized expenses, consult a tax professional about whether you need to file amended returns.

Working with a tax professional

The best advice in this situation is to get professional help. A CPA or tax professional can review your situation, identify potential issues, and help you correct them before they become bigger problems. They can also advise on the proper business structure for your type of business and ensure you're handling owner compensation correctly.

The cost of this guidance is an investment in protecting your business and personal finances. It can be a lot less expensive than dealing with IRS penalties or legal issues later.

The bottom line

Keeping your business and personal finances separate isn't just about following rules. It's about protecting yourself and making your business stronger.

If you haven't already, take these steps right away:

• Open dedicated business accounts.
• Set up systems to track business expenses with documentation.
• Make sure you and your business partners have clear written agreements about the use of accounts for personal expenses.
• Develop and distribute written policies for card use by employees.
• Monitor your business credit reports for unusual activity such as new accounts you didn’t open, or unusually large balances.

The initial setup takes a little time, but you can save hours during tax season. More importantly, these practices can help reduce your risk of legal and audit issues.

Small businesses often run on trust, Serralta warns. “In good times, this works out fine until financial stress or growth pressure occurs. I stress the importance of developing a clear-cut credit-card policy that defines what constitutes a business expense, establishes spending caps and lays out who has charging authority.” 

Frequently asked questions