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I bought a different domain for the business service however, called businesswidgets.com, which has a 301 redirect to business.widget.com. My plan was to use businesswidgets.com as the display URL and business.widget.com as my destination URL in my adwords ads. Is this going to be cause any problems/penalties?
My reasoning is that if I have a subdomain in the display, some people may later just remember and type in the base domain name widgets.com and end up at the wrong place.
Reasons why your Ad will be rejected and your Ads will not show:
1. The top-level domain of the display URL does not match the top-level destination URL in the ad. For example, if your destination URL is [businesswidgets.com...]
your display URL must contain at least 'businesswidget.com.'
2. The landing page redirects to another page.
3. The landing page did not load.
4. The landing page must allow a browser's 'Back' button to work.
For your reference, this article on the AdWords blog goes into detail about the most common reason why ads get disapproved for incorrect URL: