The Benefits Of Using Small Business Credit Cards
Personal credit cards, depending on how they are used
, can be either very helpful or very harmful. The potential harm from careless use of small business credit cards can perhaps be even greater, simply due to the higher stakes. The potential benefit, however, both in terms of convenience, time and money, can also be significant.
Bookkeeping
Different small businesses employ a wide variety of strategies to record expenses. Accurate record-keeping is critical for maintaining a healthy profit margin, as well as for correct tax preparation. Using a small business credit card for your business expenses makes it virtually effortless to differentiate your business from your personal expenses. This is particularly true now as all major credit card companies offer extensive online record-keeping and analysis tools for all purchases made with their card. If necessary, as your business grows, you can use several different small business credit cards -- one for each category of expenses -- to further assist your record keeping.
Rewards
Most small business credit cards will pay you a percentage back of every purchase you make using that card. For example, the Discover Business card pays you five percent back on all office supply purchases, two percent back on all gas purchases, and one percent back on all other purchases. You can also find cards that give you other types of rewards for your purchases, such as airline miles. The variety available allows you to select a card that offers the specific type of rewards that benefit you the most.
Capital
Taking on too much long-term debt can sabotage a small business's potential for success before it builds any momentum. In certain situations, however, having access to significant amount of capital can mean the difference between seizing an opportunity for major profits and significant growth, and missing out on the opportunity to better-prepared competitors. Regardless of your personal business strategy, having options in the form of available capital is never a bad thing. Without an established credit track record, however, you will often be hard-pressed to find significant amounts of capital available to you. Using a small business credit card can help you build this track record.
Convenience
Many small business owners are used to paying suppliers, freelancers and contractors via the traditional method of a paper check sent in response to a bill received by mail. However, this rather cumbrous process takes up valuable time and distracts you from concentrating on normal business operations and long-term strategy. Additionally, a paper bill or payment can easily be misplaced, leading to further hassle, wasted time and potential interruptions in service or supply. Aside from all the other potential benefits of using a small business credit card, perhaps one of the most important is simply its ability to simply and even automate the payment process. Especially now that modern technology allows virtually any contractor or vendor to accept credit card payments through a smartphone, paying these expenses with a credit card helps make the entire process much faster and more straightforward. Additionally, most small business credit cards allow you to set up automatic payments for recurring expenses, saving you even more time.
Safety
Paying for business expenses with a small business credit card can provide you with an extra layer of financial protection. Most credit card companies will not hold you liable for fraudulent charges made with your business card. Additionally, if you realize after paying for inventory or services that they were not delivered as contracted, you might have difficulty securing an appropriate refund from an unscrupulous supplier or contractor if you used a direct payment method such as a check. If you paid via a small business credit card, however, you will generally be able to contact the credit card company to stop or reverse payment, thereby protecting yourself from potentially substantial financial harm.
Delegation
Having a small business credit card, or even several such cards, allows you as the business owner to more easily delegate financial responsibilities to your employees and staff. The distinct separation a small business credit card creates between business and personal accounts means that you can have certain staff members pay for business expenses immediately without having to route them through you first.
Prestige
Perhaps one of the most often overlooked benefits of a small business credit card is the prestige and legitimacy it can bring to a business. Although it is certainly true that some small business owners still pay for expenses using personal checks or cards, the vast majority of major businesses use business cards and accounts for all expenses. Having a small business credit card can help put your business in that same class in the eyes of vendors, customers and financiers.
by: Laura Ginn
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