Does A Credit Card Make Sense For Your Business?

Posted onLeave a commentCategoriesBusiness Credit, Credit Cards for Business

Business Decisions - Credit Cards for Business

Business Credit Cards Do They Make Sense For Your Business????

Good question huh?  Well, this is a great topic to discuss – most small business entrepreneurs are self funding.  Many small businesses are classified as Sole Proprietors.  (Which simply means there is no legal distinction between the owner and the business entity.  As the owner, you are in control of all the elements and legally responsible for the business finances (debts, loans, loss, etc.)

As a small business entrepreneur – there are peaks and flows to your earnings – learning how to handle the money is key to your continued business success.  First and foremost:

  • Set up a separate business bank account
  • Do not co-mingle personal and business funds
  • If you are doing a DBA (doing business as) make sure that it is noted on the bank account – example – Judy Musgrove dba Cover To Cover
  • You must file for your business license – and that is the form that is given to your bank (if you are an LLC or other type of entity.  As a “dba” – you don’t have to give them a copy of the business license – but if you do, make sure the business license says “Judy Musgrove dba Cover To Cover” (this is a little thing I learned after the fact)
  • Ok, this is a given – but I can’t tell you how many small business entrepreneurs do not do this – set up your accounting software!  Quickbooks is one of the best out there – but you can use Quicken or any other type of accounting software – make sure that the software will handle your activities – like inventory, invoicing, automatic payments etc.

Another Resource that came to my attention is “LendEdu.”  LendEdu has put together a great guide that aims to help educate business owners by:

  • Outlining the Strengths
  • Weaknesses
  • And cost of each card.

Beneath the individual reviews, there are several sections that discuss the benefits of business cards as well as frequently asked questions.

A second resource that I find helpful is the  U.S. News and World Reports article.  If you are a newly formed business and or a well established business – you may want to consider a business credit card – but keep this in mind – the interest rates are higher – if you pay off your card within that 30 day window – then the interest rate is truly a mute point.  According to the U.S. News & World Report – the following article describes the best business credit cards for 2018.

So just who is U.S. News & World Report?  U.S. News and World Reports Best Law Firms 2018

The U. S. News and World Report is an American media company founded in 1933!  They publish news, opinion, consumer advice, rankings and analysis.  In 2010 – they transitioned to primarily web-based publishing.  For this post – we are talking about credit cards for business.  So let’s go to the “Benefits a Credit Card for Business can bring:

  • Instant Capital!  They can bridge the gap between cash outlay and customer payment
  • Startup Capital ~ When you are first opening your business (whether it is in your home and or at a specific location) there are organization startup and costs that you absolutely haven’t counted on
  • Growth Capital – need equipment, furniture, computers etc?  You will need a bit of funding for that

Let me add something right now for you (and I am speaking from experience) You need to go to the trustworthy sources for your information.  This is one reputable site.  They have a wealth of information and it is always to your benefit to research different subject matters.

But let’s first discuss a bit about the “Eligibility & Requirements:

  • You don’t have to have a store front or warehouse or major facility
  • If you have good personal and business credit and meet the issuer’s requirements you will get a business credit card
  • Are you self-employed?
  • Do you fall into the following categories?
    • Etsy Sellers
    • Amazon Sellers
    • Ebay Sellers
    • Freelancers
    • Independent Contractors & consultants
    • Self Published Authors

You can and do get a business credit card – with that said – if you have bad personal credit the chances of you getting a business credit card isn’t high.

Decisions - is now the time for credit cards

Last but not least – let’s explore the “7 best habits for managing your small business credit card”   So let’s talk this one out a bit ok?  This is one reason why you need a good accounting program for your business and yes, your personal finances.

  • Keeping track of your expenses and running reports will definitely help you see the true picture.

Here is a true circumstance:

  • I had a small business client who kept saying he didn’t know where his money went – well, between myself and the CPA we set up categories for different types of expenses.
  • Example – meals – yes, as a business you get a write off for your business & travel meals – however, you do not get a write off for personal meals – so we set up an account for “Food to go” which was saying Personal meals.
  • For any business related meals – we had “meals and entertainment” and for any meals traveling on business we specified meals under the travel category.

When I ran a report on the different types of meals that we had categorized we were both a bit shocked!  Note to self – being a bit more explanatory in your categories instead of utilizing general terms (in this case “meals”) it gave a true report on those types of expenses.

I have learned a lot being in business for myself and having Quickbooks business clients.  Have I messed up in my spending?  Yep!  Have I made some pretty dumb decisions?  Yep and Yep!  If I didn’t make the mistakes – I wouldn’t learn what I truly need to do.

Using the U.S. News and World Report website for gathering the factual information is just the tip of the iceberg my friends.  Ask yourself this, “If a credit card makes sense for your business refer to this blog post for your information.”

All photo’s from Unsplash ~ Andrew Neel

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