If you are starting a new business, you may be considering applying for a business credit card. Many companies do offer a credit card for new businesses. Some entrepreneurs are weary of using them. Though it is true that credit cards can create a plethora of problems, if managed properly they can be a wonderful thing to have; especially when you are starting a new small business.
The advantages of a credit card for new business
There are many advantages to using a business credit card, and when properly managed it can save you a lot of headaches.
Benefit One: Ease of itemization
Your expenditures can be tracked more easily especially because most companies will send you an end- of-the-year summary showing you all transactions in a list that is categorized and itemized. This means that your bookkeeping will be virtually done for you! Furthermore, some credit card companies provide their business customers with the option of downloading e-summaries. These could truly streamline your accounting and bookkeeping process without any additional effort or expenditure.
Benefit Two: No cross mingling
It is always a bad idea to mix business with pleasure, so keep your personal and your business accounts separate or risk running into problems with management and/or taxes. A busy entrepreneur could attest
Benefit Three: Rewards
Spurred by competition, credit card companies sometimes turn their efforts at gaining market share into special rewards wars. Depending on the card you choose, you can get discounts on anything from travel to Internet services.
Benefit Four: Spending Management
With a credit card designed exclusively for business, you can allow your employees to have a card for work use only. With employee cards you can set the spending limits just for some extra peace of mind. You can also go online and monitor the spending habits of all card holders to ensure things are going along as they should.
Benefit Five: Raising Your business credit
Having a credit card just for your small business can help you build up credit for your business. This will help out a lot in the future if you need more credit or loans.
Steps towards effective management of business credit cards
Like all financial tools, a credit card for a new business must be managed responsibly. This may take some time to for a new business owner, but all in all it is fairly simple if you stick to a good plan.
When you do decide on the right credit card for your new business you will likely find that you have a grace period of 21 days before making a payment on the card. This is a great way to help improve upon your cash flow. Using your card as opposed to checks allows for faster clearing. Finally, stay away from unnecessary debts and keep all your bills paid on time — all the time. Sometimes, basic steps are the ones that are ignored most often.