The majority of the small business owners face a tough time to grasp the concept of business finances. The supplies in their office get charged to that same account as the dog’s vet bills and the son’s mobile phone accessories. No matter the business has 5 employees or 50, having the right business credit card are essential for making company transactions. Sole proprietors too can benefit from such cards on hand. Take a look at some of the key reasons why small businesses also require such cards.
- Build Business Credit- Many people in business may not be aware that just like them their business also has a credit score. It throws light on future lenders regarding how likely they are to clear the loan through the funds of the company. In case there is no business credit then the bank is expected to look at one’s income and personal credit for reference. It may work in their favor or may not. If a businessperson has an ideal business credit card which they pay regularly, they can build for their company a positive credit that will make life simpler for them down the line as and when they require a car for their company or a new space for the office.
- Manage Business Expenses-If a businessperson still search for an accountant for sorting through their previous year’s receipts, it is high time for them to update their money management system. Through the right business credit card they can easily keep track of each penny they invest in meals, fuel, hotel rooms, computer equipment and more. During the tax season, all they require doing is printing the statements of their credit card for the year while leaving the rest for the accountant to take care.
At this point, the process of the tax return will be more bearable. Using the business credit card will help one in seeing where they may desire to cut back in case they ever require to save money. Take, for instance; one may find that they are wasting surplus money on paper which they could save via emailing their customers instead. They may also discover charges which they were not aware of such as the employees utilizing the card of the company in financing their trips to Subway daily. All this will be highlighted in clear black and white at their card statements.
- Gain Business Rewards– It is always good to get something in return from the money that one has spent already. It is here where a reward program comes into the picture. Every penny that one invests on their business credit cards may result in some reward points that they can exchange for pure cash in their pocket, for hotel rooms or plane tickets. Some reward programs concentrate more on travel and fuel, and there are others that do so for overall purchases. One can assess their choices in figuring out which card can offer them maximum rewards. There are a couple of reward cards that carry an annual fee that may mainly reduce into their bonus money. One needs to think about the amount of money that they will spend logically on the card yearly and the rewards which it will equate to like a monetary sum. After this deduct the annual fee to see whether the card continues in being useful for them.
- Distribute Business Money-If youremployee require access to their business account, it is the right credit card that will offer them just that. They can get the card issued in specific employees’ name that they trust in their organization and then they can see what these employees are investing money on. In case of a partnership, it will allow them as well as their partner in having access to that same fund. In this form of setup, no confusion will arise regarding who exactly is in control.
- Separating Finances- A business credit card will help in keeping the business transactions utterly separate from their personal transactions. It can aid them with taxes along with keeping records as they do not require to sort the credit card bills for determining which expenses were personal and which were for their business. Besides they also need not worry regarding late payments on the business card thereby affecting their own credit rating.
- Surviving Tough Times-If your business has minimal cash flow or experience slow periods, the business credit card will help them in sustaining the tough times. They can use it for purchasing the required supplies or paying suppliers till the business once again picks up. If one has just begun, this card can aid them in covering overhead and purchasing equipment till they begin in generating revenue.
- Establishing Credit- This card will help in establishing credit for their business. Akin to personal credit cards proving that one can handle this card responsibly through on-time bill payments and not exceeding their credit limit indeed will help in establishing their creditworthiness. It will prove advantageous later if they require borrowing money for business expansion.
- Employee Benefits-If your business is large having a couple of employees, you can offer them their own cards as a benefit or aid them in conducting business. In case you employ a salesperson, he or she can, for instance, use this card for entertaining clients or paying for the expenditure while traveling. Via setting the limit of the card, you can prevent card abuse or avoid overspending. It may also help them in tracking their expenses.
- High Limits- As per AllBusiness.com, there are a couple of business credit cards that come with upper limits of $50,000 and above. If you require to make any purchase for the business and do not desire to dip into your cash reserves and/or take out the business loan, it will give them another alternative. It will also help if their personal card limit happens to be too low for accommodating some transactions.
A business card must not appear something scary to one rather it should be seen as an exciting new chance for expanding their legacy during the future. As far as one manages their money wisely, they are likely to get enough from such plastic pocket companions.