Attaining and using a credit card is a must for any small-business owner. The costs of starting a business are steep, and the chances you take with your investments are high. Every entrepreneur knows that they are taking a risk when borrowing money. If the business fails, they may never see those assets returned. But, before jumping into full-on credit card use for your small business, it’s best to choose wisely and make sure you are handling your credit appropriately. Being aware of some of the most helpful credit card pointers for business owners is a good start.
Read on for some life-savers when it comes to handling your business credit card:
Watch your interest-free period
An interest-free period often sounds like a beacon from the skies above for most small business owners. We all know that starting up a business requires a huge investment. Not only do you need to take out a loan to manage start-up costs, you will very quickly incur operation costs as soon as things start running. As it takes a while to get that profit returned, you know that you are spending quite a bit of money from the get-go.
If you make sure to make purchases with a credit card that has an interest-free period of 12-18 months, then you will have time to pay that money back before you start owing even more. The only problem with this occurs when business owners fail to manage their interest-free periods accordingly. If you accidentally run out of interest-free time, you will suddenly be hit with all your interest fees at once. This means you will end up paying much more than you originally spent and losing money. Use those interest-free periods to your benefit! When handled correctly, it really is a free loan.
Never use your business card for personal use
The importance of remembering to use your business card only for business really lies in the paperwork. When you inter-mingle the two, it only creates way more work for you. Not only will you have to go through your monthly balances to sort out which charges are which as you do your books, tax season will become so much more of a hassle than it needs to be, as you will have to prove and disprove every charge on that card as business or not.
This cannot be overstated. If you don’t choose a credit card that will accrue reward points, then you are really losing money. Any good small business card will have some sort of rewards program. Whether it’s additional frequent flyer miles or discounts on office supplies or shipping costs, there is absolutely no reason not to make your money work for you. If you don’t, you are letting the competition take part in free assets that you cannot also attain.
Also, when you do choose a card with rewards points, make sure that the points will actually help your business in a financial sense. While some deals may sound appealing, you have to put your pocketbook first when it comes to business matters and avoid the deals that offer cruises, movie packages, or anything similar.