Bookkeeping workflows
How to reconcile business credit cards cleanly
Why credit cards break more books than bank accounts, how to record charges and payments correctly, and how to close a card statement every month.
The short answer
- A business credit card is a liability account, not an expense account.
- Charges are recorded when they happen; the card payment is a transfer, not an expense.
- Recording the monthly payment as an expense double-counts everything you bought.
- Reconcile the card to its statement every month, exactly like a bank account.
The mistake that doubles your expenses
If each charge is booked as an expense and then the payment to the card company is also booked as an expense, every purchase hits the profit and loss twice. The payment simply moves money from the bank to the card balance.
Set the card up the right way
Create one liability account per card, matched to the real statement. Shared cards need the cardholder captured on each charge so you can answer who spent what without opening the statement.
- One ledger account per physical card
- Charges coded to the correct expense account, with a receipt attached
- Payments recorded as a transfer from bank to card
- Interest and annual fees coded as their own expenses
Receipts are the hard part
Cards generate the most receipts and the least paperwork. Clients on LedgerDude snap a photo at the point of sale and our document intelligence matches it to the charge automatically, so month-end is not a shoebox exercise.
Same month, right way and wrong way
- Card charges during the month
- $14,300
- Payment made to the card
- $12,000
- Expenses recorded, correct method
- $14,300
- Expenses recorded, payment also expensed
- $26,300
- Profit overstated or understated by
- $12,000
What this tells you: One wrong coding rule misstated the month by $12,000. This is the single most common error we find in cleanup work.
What you see inside LedgerDude
One page with your money in and money out, your cash on hand, and a short list of questions when we need your help.
Close a credit card month
- 1
Download the statement
Get the PDF and note the closing date and closing balance.
- 2
Confirm charges
Check every charge is on the books with a receipt and a sensible expense account.
- 3
Record fees
Add interest, annual fees and any foreign transaction fees.
- 4
Record the payment
Enter the payment as a transfer from the bank to the card liability.
- 5
Reconcile
Reconcile to the statement closing balance and save the report.
Questions people ask
What if I paid a business expense on a personal card?
Record the expense and offset it to owner contributions, then reimburse yourself. See the guide on separating business and personal finances.
Does the card balance belong on the balance sheet?
Yes, as a current liability. It is money you owe, exactly like a short-term loan.
Do I need every receipt?
Keep them for anything over $75 at minimum, and for all meals, travel and asset purchases regardless of amount.
Keep reading
Recording payroll so your labor cost is actually right
How gross wages, employer taxes and withholdings post to your books, and why the total that left your bank is never your true labor cost.
Sales tax bookkeeping: collect it, hold it, remit it
Why sales tax you collect is never your revenue, how to record it as a liability, and how to reconcile what you collected against what you filed.
Fixed assets and depreciation without the headache
When a purchase is an asset instead of an expense, how depreciation spreads that cost over time, and how to keep a fixed asset schedule your CPA can use.
All accounting guide library guides
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