Starting a Small Business with A Credit Card

The recent economic slump and scarcity of employment has inspired many people to start their own businesses.  Although financing a business is a challenge in itself, aspiring entrepreneurs were able to find resources to successfully start-up and run their businesses.

One such tool for business financing is the business credit card.  These credit cards are especially designed with features and services which can benefit business owners.  On this post, let us discuss the specific functions of business credit cards and how you can use it for starting a business:

Business Credit Card Features

Higher credit limit.  Using your personal credit card for business expenditures can hurt your credit score especially if you often max out or exceed your limit.  Meanwhile, credit cards for small businesses have higher credit limit so they can be used for larger purchases.

Yearly account summary.  Issuers of business credit cards provide annual account summary reports so you can review all your previous transactions for the entire year.  The yearly account summary report is also great reference in preparing business taxes since you will be able to distinguish which of your purchases are eligible for tax credit and deductions.

Savings and discounts.  Business credit cards are affiliated with vendors and suppliers so cardholders can enjoy exclusive discounts from their purchases.  You can even choose business credit cards with rewards to get more out your spending.

Start a Small Business with A Credit Card

How can a business credit help you in starting your company?  Consider the following points:

Purchase equipment.  Using cash to buy new or used equipment can eat up a large portion of your capital.  You can use your business credit card to get equipment that you need to start-up your business operations such as computer, cash register, fax machine, etc.

Many credit cards offer deferred payment option so you can pay back your charges in instalments at a low rate.  In fact, you can even find business credit cards that offer zero interest rate for 6 months or longer so you can have the chance to pay your debts without interest.

Pay your charges in full and on time. The same rule applies for personal credit cardholders and business credit cardholders. You can truly save a great deal of money if you will pay your monthly balance in full and on time.

Build business credit.  Credit cards for business are great tools for establishing and building business credit history.  Look for an issuer that will report your payments to major business credit trackers like Dun & Bradstreet and Experian (business).  This way, your activities will be reported as you use your business credit card to meet business costs.

Watch your credit limit.  Be careful not to max out or exceed your credit line as this may inflict damage to your business credit score.  You might also be charged with a penalty fee for exceeding your limit.  To avoid going over the limit, check your balance first plan your purchases in advance before using your business credit card for payment.

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