Small Business Tips
Should You Get a Credit Card for Your Small Business?
If you’re start
According to Money obtaining a credit card for your new small business can make your life easier in a number of ways. First having a separate card for your business will make it much easier to keep track of your expenses and keep your books in order. Additionally ensuring that you use the correct credit card (business or personal) depending on the purchase will also make filing your taxes far simpler.
Although the decision of whether you qualify for a business credit card will hinge on your personal credit score, the balance of most cards will not affect your credit report unless you default. This is great news for entrepreneurs who might need an advance to buy inventory or other items for their new business. While it’s obviously not a free pass to spend money you don’t have, it is nice to know that having a large balance won’t hurt your credit the same way it would if it was on your personal card.
As you use your business credit card you will also start developing business credit. This will help further separate your finances in the future and allow you to obtain additional loans that aren’t based on personal credit. Of course this is more incentive to use your credit card wisely and maintain a strong score by making on-time payments and avoiding hitting your limit
Just like when you’re looking for a personal credit card, it’s worth shopping around for the card that will work best for you and your business. Some things to look out for are annual fees, APR, and whether or not the card balance will reflect on your personal credit (like I said, most don’t but some do). Many cards will also offer incentives such as cash back or other rewards, so be on the lookout for those as well.
For many entrepreneurs obtaining a business credit card for their new company may be in their best interest. In addition to having the ability to conveniently separate your finances and cover unexpected expenses, owners who use their cards responsibly can also establish strong business credit. This in turn will come in handy as you look to grow your and expand your company in the future.
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