I am a sole proprietor organized as a LLC. I have a business credit card that I use strictly for business purposes. My question is how to treat expenses for which I have not paid the credit card company. Unfortunately, I am running a balance on the card every month, and with things being the way they are, I can't make much more than the minimum payment on the card (I'm not in default, though). Suppose that I make $100 of business purchases in a given month and pay that bill on time. Each transaction is invoiced against a vendor (postage to the USPS, a monthly software license fee to that vendor, and so on). However, I can only pay the minimum payment, let's say $75.00. in my bookkeeping software, I can allocate $75 to as many vendors as I need.

Let's say the remaining $25 belongs to one vendor. The next month, the same thing happens - I charge $100 but can pay the credit card only $75. it's now the new calendar year and it's time to figure out my business expenses for tax purposes. What do I do about the vendor to whom I did not allocate a payment on the credit card? Is that expense an expense I can claim on my taxes only for the calendar year in which I incurred that expense?

Suppose I allocated a payment to that vendor (let's say I paid the $50 to the credit card company out of cycle) but made the payment in the new calendar year - can I claim the expense in the new year (since that's when I expended cash to "pay" it) or have I simply lost the opportunity to take that expense off my taxes?