Manufactured Spending With Own Business

Old Jan 23, 21, 7:19 pm
  #1  
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Manufactured Spending With Own Business

Hello All,

I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?

Thanks.
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Old Jan 23, 21, 8:58 pm
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Going to pay the credit card processing fee and the taxes on the "profits" you'll be making on those sales? Processors will also shut you down if they see the name business and credit card are the same.
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Old Jan 23, 21, 10:17 pm
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Also, if your state is like most states, you will be paying a gross receipts tax (business & occupation tax) on those manufactured revenues, regardless of any “profit.”
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Old Jan 23, 21, 10:39 pm
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What are you going to be "selling" yourself? If you run the charge and then take the money out yourself, it will look like profit to the taxman.

Also, your bank and/or credit card processor are not going to be amused. You can explain exactly what you're doing, and the only phrase that will come to their mind is "Money Laundering."

Almost all high-volume MSing gets shut down eventually. If all you lose is an account you were only using for MS anyway, it's no loss, but if you lose your business, it's a big deal.
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Old Jan 24, 21, 8:09 am
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Why don't you pose this question to your business lawyer and accountant.

I am certain that they would be amused by the question, but since you are paying for their services, you should get an official answer.
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Old Jan 24, 21, 8:48 am
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A friend of mine years ago charged his personal Amex SPG to his own business to meet MSR.

He got a call from AMEX, said he is not allowed to use his card for his own business. They knew. He never got the Bonus on that card.
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Old Jan 24, 21, 9:43 am
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You may be able to get your relatives or friends to help you with the scheme if it can be profitable. But careful when you tread water.....
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Old Jan 24, 21, 9:50 am
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I own or am a shareholder in more than one small business. Once I used my CC to pay for legitimate services between a business I owned and a business I co owned. Square shut down our merchant account with no appeals process.
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Old Jan 24, 21, 9:54 am
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Forget about local taxes, the amounts you charge have to be classified for accounting purposes. If not revenue, what are they? If revenue, then it's taxable income. If there are no costs of doing business, e.g. "expenses" related to that revenue, 100% of what you run through the business becomes taxable income at whatever marginal rate you or your business entity pay.

Aside from being shut down by your payment processor, this almost certainly generates a SAR which may or may not affect all kinds of other personal and business transactions in the future.
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Old Jan 24, 21, 10:22 am
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Generally, I've no qualms with MS per se but this is something where the reward isn't worth the risk. Card issuers really frown on this, in particular Amex, any suspicion you may be circumventing cash advance fees would lead to your accounts being closed. The worst case scenario is that if you were unlucky enough to get caught up in any kind of money laundering investigation. It's not worth it, in my view.

As I'm sure you well know, when running a business it's of vital importance to not only avoid any violation of State or Fed laws, but also to stay clear of even the mere appearance of impropriety.
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Old Jan 24, 21, 12:35 pm
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Just a short list of potential issues
1. Your merchant agreement or the processing agreement has language that prohibits what you describe.
2. Your actions are very similar to that of money laundering and could bring observations and investigations from various government entities
3. The credit card agreement has language that prohibits what you describe.
4. Your merchant account will receive a 1099 Gross Proceeds statement end of year and you will have to account for all of that money reported as income.
5. Fraud alerts may be triggered along with what is known in the industry as "bust outs" alerts may be triggered.
6. A lot more issues I am just lazy
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Old Jan 24, 21, 1:07 pm
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Many have tried. Most merchant agreements prohibit self-dealing and will shut you off for anything other than a one-off. Ditto for a lot of anonymous prepaids.

You really need someone else’s business to make this work, preferably a grocer. I believe the Dans Deals Jewish group had some success with this for a while.
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Old Jan 24, 21, 1:13 pm
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Any merchant vendor puts their own business at risk and is presumably being charged interchange fees.
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Old Jan 24, 21, 2:27 pm
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Originally Posted by m132f View Post
Hello All,

I was sure someone asked this question in one form or another, but after looking around here, I didn't see it. My apologies if a thread like this already exists. Anyway, I have my own business, which can accept CC payments. My question is can I use the business to charge my points cards as a way of manufactured spending?

Thanks.
This is forbidden in your merchant account agreement.....You agree not to provide yourself with a cash advance.

So feel free to do this, but when you are caught, you will get flagged and your merchant account shutdown.
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Old Jan 24, 21, 4:01 pm
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Originally Posted by m132f View Post
My question is can I use the business to charge my points cards as a way of manufactured spending?
IMHO - points raised by many here are minor issues, and in some cases incorrect. Depending on how you plan and implement, it is possible.

But why would you need to pay for your miles, as credit card processing isn't free?
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