• If you’re a business owner, have you seriouslyconsidered applying for a business credit card?
• Do you feel that a credit card for business is really unnecessary?
• Do you prefer to use your personal credit card for your business expenses?
• Would it really make a difference whether you use a business credit card or not?
To answer these questions objectively, let’s discuss the importance of keeping your business financing separate from your personal finances.
Personal and Business – Two Different Finances
Separating your business financing from your personal financing is undoubtedly crucial. Why so? As your business grows, you would be confronted with more expenses and larger purchases. Charging all these expenses to your personal credit card would surely create confusion in the long run. It would also be more difficult to keep track of your business spending and to make financial decisions for your company.
Combining both your personal and business expenses in a single account also poses the risk of overspending. It would be very difficult to control your budget if there’s no clear boundary about which funds are for you and your family and which funds are for your business.
For this reason, even home based entrepreneurs and small business owners are also advised to take this matter seriously. You may think that using your personal credit card is okay especially during the early stages of the business. However, don’t forget to consider the long term effect this could have for your business.
Separate Your Finances with A Business Credit Card
Applying for a business credit card is quick and easy. More importantly, business credit cards are great tools for separating your business and personal finances. By using a business credit card, you can easily monitor your company’s spending by checking your monthly statement of account.
Credit cards for business provide you with monthly and quarterly/yearly account summaries. These summaries present an itemized report of all the expenses you’ve made for the entire year. Such reports are invaluable when performing your annual inventory of accounts and when filing your business taxes.
Many credit card companies also provide an online account access feature. This means you can check your business account at any time without even leaving your office. Account summaries can also be downloaded to your computer so you can use them along
with the application software you use for your accounting and bookkeeping.
Aside from these conveniences, having a business credit card is also a great way to build corporate credit. As you use your credit card with your business expenses, you also create a solid credit history for your company.
The key to enjoying good corporate credit is by keeping within your credit limit, submitting your payments on time, and using your business credit card strictly for business spending. When the time comes that you need to apply for a business loan, you can be sure that having an excellent business credit would work to your advantage.