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How to manage your small business credit cards

creditcards23282319.jpgSmall business credit cards are growing in popularity. However, with the ever changing interest rates, now is the time for business owners to learn small business credit card management.It is important to understand that while there are new opportunities to apply; credit debt still needs to be approached with caution. One of the major questions that new business owners have is wondering if they should you use a small business credit card over a personal card. The answer is an unequivocal-yes! With prudent use and management, your small business credit card can provide many benefits and advantages. Some of these include:

  • You can avoid co-mingling finances. Mixing your business and personal transactions is always a no-no, and it creates potential tax and money management problems. By using a small business credit card, you will let the IRS and anyone else who is interested; know you are serious about your business.
  • It provides for easy itemization-This is critical since tracking your business expenditures at year-end, can be a nightmare, for small business owners. Many credit card companies will even provide you with a year-end statement summary, with your transactions itemized and categorized. The bottom line is that you can better organize your bookkeeping process, with a small business credit card.
  • You can build business credit-A small business credit card provides a newly established business, the opportunity to build business credit. This will be highly useful in the future, as your business grows, and you need capital in the form of credit lines or loans.
  • You can get special rewards-The highly competitive credit card and business market, has led to the development of reward and discount programs, for small business credit card users. Discounts and rewards can range from office supplies, and travel, to software and phone services. You can take advantage of using the credit card to lower your expenses.
  • You can better manage employee spending-Many small businesses provide cards for their employees with preset limits. You will just need to make sure you monitor their spending, on the separate statements you receive.

It is important to realize that a small business credit card is like most financial instruments, responsible use of credit can help your business, and misuse of your business credit makes you personally liable in most cases, and has the potential to destroy your business. You can effectively manage your small business credit cards by using the following steps-

  • Start with who you know-You should always consider applying for your small business credit card, at your existing financial institution. Your banking relationship can greatly aid with the approval process.

  • Limit jumping from card to card-You should understand that signing up for multiple cards,to take advantage of deals,can have a negative impact on your credit rating,and make managing your cards more difficult.

  • Take advantage of the grace period-The majority of small business credit cards offers a 21-day grace period, before you have to make payment on your purchases. You can improve your cash flow using a credit card.

  • Always pay online-You can save considerable time and money, by paying your small business credit card online, versus paying by teller at your local branch, or mailing in your payment.

  • Resist the cash advance-You can reduce credit card fees, and interest costs, by not using the cash advance feature on your card. Cash advances incur more fees and costs. Use your business account debit when you need immediate funds.

  • Do not make late payments-Late fees and high interest rates are the number one factor that will quickly erode the merits, of using your small business credit card. You should be responsible, by paying off your business credit each month.

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