Corporate card: what is it

What is a corporate or business card

A corporate card is linked to the settlement account of a legal entity or sole proprietor. It is used to conduct any business-related payments. Such cards are provided by various credit organizations, and each has the right to set its own conditions for the issuance and servicing of such banking products. 

Entrepreneurial activity requires conducting dozens of operations that are convenient to carry out using a business card. Potential costs for the issuance and servicing of the banking product will significantly reduce the amount of taxable profit. 

A foreign currency business card will be required for sole proprietors who frequently travel abroad for business. 

Business card for LLC

Corporate property and money do not belong to the manager or founder, so using a business card to pay for personal expenses is prohibited. If the tax service identifies and proves such a violation, the entrepreneur will have to pay income tax with penalties and make an insurance contribution. In this case, the feasibility of the purchase will also have to be justified to the bank.

Opportunities for legal entities with this card are as follows:

• making one-time or regular office purchases; 
• paying for utility and operational services; 
• settlements with counterparties and suppliers; 
• paying for services of external specialists who are not on the organization's staff;
• paying for services and purchasing travel tickets for business trips. 

Payment of taxes and payment of wages to employees is carried out exclusively through the company's settlement accounts via the banking system. It is prohibited to use a business card for these purposes. 

Business card for sole proprietors

Sole proprietors operating under the simplified taxation system have more opportunities than legal entities. This is because the "Income" tax regime does not restrict the entrepreneur in personal expenses, and tax authorities do not monitor them. There are only exemptions thanks to which a sole proprietor can use a business card for personal purposes. In some cases, management will be required to report on expenses that raised suspicions from the Federal Tax Service. 

How to issue a corporate card

A corporate card is linked to the company's account, meaning a card that will be used by the manager and accountant can be linked to the settlement account. They will be able to pay for goods and services with it, as well as withdraw cash at ATMs. Cash withdrawals must be reported as advance funds.

Also, a corporate card can be linked to a separate account intended to cover specific expenses. That is, an entrepreneur can open a so-called "stationery" account, which employees will use to pay for purchasing office supplies for the company. In this case, using the card for cash withdrawals is impossible, as is using it to pay for purchases in other categories. 

To issue a business card, the following documents must be submitted to the bank: 

• application from the head of the organization or sole proprietor; 
• constituent documents; 
• extract from the Unified State Register of Legal Entities (YGRUL) or Unified State Register of Individual Entrepreneurs (YGRIP). 

If the business card is to be provided for use by a specific employee, an application from them and their passport will be required. The organization's managers must draw up a power of attorney granting the right to dispose of funds. After that, the bank signs an agreement with the client for the issuance and servicing of the card. 

Types of corporate cards

Corporate cards can be personalized and non-personalized. The former are provided to a specific employee, for example, an accountant. They are responsible for the expenses on the card even if it is handed over to another person. The employee's responsibility is specified in internal documents in a free-form manner. 

A non-personalized business card can be used by any employee. Most often, it is issued when several people will use the banking product in turn. The list of employees granted access to the card is established by an order. Workers must sign it. 

Also, corporate cards can be not only debit but also credit cards. Funds of a specific organization are debited from a debit card. If available finances are insufficient, the company can borrow them within the available limit set by the bank. 

A business card can be denominated in rubles or foreign currency. Ruble cards are mostly used for settlements within Russia, while foreign currency cards are provided to employees going on business trips abroad. 

Features of using corporate cards

To issue a corporate card, the manager submits an application to the bank. If the card is obtained for a new account, the tax authority must be notified no later than 7 working days after its opening. If the card is linked to an existing account, additional notification to the tax authority is not required. 

Several corporate cards can be linked to a single account.   

The validity period of a corporate card is up to 3 years. After its expiration, the bank re-issues the card and sends the manager a notification about when it is ready. If the card needs to be closed before its expiration date, the manager personally notifies the credit organization of their decision. Some banks allow doing this through a mobile application.

The procedure for using a business card is established by the company's internal acts and orders. The documents specify: 

• expense limits for a specific employee, department, or the enterprise as a whole; 
• list of permitted expenditure purposes; 
• timeframes for submitting reports on cash and non-cash transactions; 
• list of documents accepted for accounting. 

Additionally, the order specifies liability for loss of a business card and disclosure of confidential data. Special logs are used to record the issuance and storage of cards, in which movements are recorded. 

What can be paid for with a corporate card

Purchases and services paid for with a business card are considered by the tax authority as expenses aimed at carrying out activities and generating profit. The general list of expenses that can be paid with a corporate card is as follows: 

• all stipulated travel expenses, including employee meals;  
• fuel payments; 
• utility payments; 
• purchase of office supplies; 
• corporate hospitality expenses; 
• purchase of software;
• payment for online content; 
• postal and courier services.

In addition, sole proprietors may pay for personal purchases with the card. Such expenses are not taken into account when calculating the tax base. 

How to report expenses

For each transaction made with a business card, employees must submit a report to the accounting department. The list of documents to be provided depends on the type of transaction made. 

Advantages and disadvantages of corporate cards

Advantages of a corporate card: 

• simplified control over employee actions; 
• ease of processing and issuing accountable funds; 
• no need to withdraw company cash and store it in the office; 
• you can pay for goods of any amount; 
• ability to shop online; 
• 24/7 access to funds on the card; 
• no need to buy currency for overseas business trips; 
• if a wallet is lost, the employee does not risk accountable funds – simply block the card, and the company's funds will be safe; 
• possibility of discounts on account servicing and bonuses. 

Business cards have fewer disadvantages, but they should not be overlooked: 

• employees must confirm expenses abroad with receipts and additional documents; 
• regular cash withdrawals may attract the bank's attention; 
• during an audit, the Federal Tax Service pays attention to card expenses and their confirmation; in case of discrepancies, penalties, taxes, and fines may be assessed.  

Corporate cards have many advantages, which is why they can be considered a convenient payment tool for legal entities and individual entrepreneurs. Clients can get a debit or credit card linked to their company's account. Only individual entrepreneurs operating under the simplified tax system can use a business card to pay for personal needs, as expense reporting is regulated by law. Each bank sets its own conditions for issuing corporate cards, so before applying, you need to study all the features of banking products and evaluate the benefits of each offer. 

Frequently Asked Questions

To conclude the article, we will answer the most frequently asked questions on the topic.

Can a corporate card be linked to a foreign currency account?

A corporate card can be linked to a foreign currency account. Transactions on it will be processed similarly to ruble accounts. 

Are there corporate cards with contactless payment capabilities? 

A corporate card can support contactless payment. This option is available not only for plastic cards but also for virtual ones. 

Can a corporate card have an overdraft? 

Yes. In this case, the use of overdraft funds and the repayment of existing debt on it are handled similarly to transactions using a credit limit. 

Can money be transferred from a corporate card using bank details?

No, such transfers are not allowed. A corporate card cannot be used to pay salaries or allowances to employees, or to pay fees and taxes. 

How to withdraw money from a corporate card back to the settlement account?

You cannot return money transferred to a corporate card back to the settlement account via a regular transfer. You need to withdraw it and then deposit it into the account through a cash desk. If the corporate card is no longer needed, it can be closed. In this case, the bank transfers the remaining balance to the settlement account.