A small business credit card is absolutely essential for starting a new business and maintaining a business into the future. With all the challenges of running a small business, having a credit card can help track and control spending. The monthly statements will give you an accurate record of all expenditures.
Separating personal charges from business charges is the most obvious advantage of this strategy. Tax time will be made much simpler when expenses can be taken from monthly statements. Some companies even send a quarterly recap with expenses broken out into categories. If an audit of expenses does come up your statements will all be on record.
The card should be registered in the name of your business so there is no confusion with your personal account. Keep all personal expenses on your personal card and business expenses on your business card. Even if you can easily tell the difference you might have a more difficult time convincing an auditor. With all of your expenses on this card and regular on time payments your credit score will go up and your credit line will increase. Some issuers will do this automatically. You can also request an increase and will get one if all of the issuer's criteria have been met. A larger credit line can be a life saver in slow times for your business or an emergency.
Take the time to compare small business credit cards before you apply. The key points to compare are interest rates (APR), grace periods, annual fees, late fees, rewards and other benefits. If you are currently carrying a balance on your business card, you may want to look at a balance transfer card to eliminate interest charges. Be sure you know the time limit of the 0% interest term, there will be a limit.
Since you will be the person who guarantees payment you never want to miss or be late on a payment. Credit history gets shoved to the back burner until we need it. Protect and respect this important part of your financial stability. On time payments are crucial to good credit. Use your card for normal business expenses only and you will alleviate the problem of monthly bills that cannot be paid.
Credibility with your vendors is enhanced when you use your card to pay them. The vendor gets his funds immediately and you have a record of the purchase at the end of the month. Instead of writing ten checks to your suppliers you can write one to the credit card company. Using a small business credit card has many advantages. Your record keeping will be the best, you will be building credit and you will be building credibility.
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