@john-pero wrote:
Okay, so I have not read every single post so I may have missed where it should have been mentionedf that each company can be a customer of or venbdor to the other. If Company A credit card is used to purchase something for Company B then that is a billable expense, which can include amarkup when invoiced. This does require that each company is a unique entuty with a unique FEIN. If both companies are sole proprietorships of same sole owner (or even simple LLC) then truly owner draw and owner contirbution make the most sense.
In the world of small business it is not always convenient or even possible to secure credit cards in the name of the business; most sole props use personal cards instead. And due to fund shortfalls it is not always possible for one company to reimburse another, in which case intercompany loans are the way I see to go. In the corporate world you can have loans to and from the shareholders so why not between 2 companies that exist at arm's length.
Regarding Finfrock, and current due on long term liabilities, I have been there and had to do that for banks and other lenders, the sole reason to determine cash flow and liquidity based on everything possibly due in 30 days. It means nothing for tax purposes, only for borrowing.
I agree on the customer idea... I was actually discussing this with Teri privately yesterday, but didn't post it here. That is definitely an option as well and I'm glad you brought it up here.
I also agree on the difficulty of getting credit cards for small businesses, so sometimes you just have to figure out how to make it work. I don't shy away from creating loans between companies at all if it seems like the best solution.
Thanks for the follow up on the cash flow and liquidity discussion. I know it doesn't impact taxes, but there is a line for it on the balance sheet. If nothing else, it is a tool for the IRS or other stakeholders to see what your business is reporting on these lines, but definitely does not have an impact on tax calculations.
Great post and glad to see another point of view here. :)
