Many small and medium-sized business owners use credit cards as part of their business. The problem is that many make the mistake of using their personal cards. This poses some major problems:
First, if you use your personal credit cards for your business, you will blur the line between professional and personal finance. The better the separation between the finances of your business and your personal finances, the better you will be. For this reason, a credit card in the name of your business is the best route.
Second, the use of your personal cards for your business puts your personal credit at risk. If the debt belongs to the company, should not it be credited by the company?
Most people do not think that it is a big problem as long as they do not encounter any problems and that they no longer have their personal credit on which to rely.
In one example, a couple of businesses accumulated more than $ 100,000 in unsecured debt on their personal credit. When the company's earnings dropped, even though the company was able to stay afloat in the beginning, the couple was forced to declare bankruptcy.
With their personal credit destroyed, they could no longer obtain credit to support their business, which led to serious difficulties. The stress has had adverse consequences and the couple is now divorced. Perhaps things would have worked differently if they depended on commercial credit rather than their personal credit.
You may think that your business will not have any difficulties, or that you will not use a lot of credit cards anyway. What is the point, then?
The use of a professional credit card in your business offers real benefits, aside from the two already mentioned. For example:
1. Streamline operations and automate expense tracking. Paying expenses can be much easier to manage with a business card and reports can be generated monthly or annually in many cases to help categorize and analyze expenses.
2. Business cards also have "rewards" programs! If your business has many regular monthly expenses that can be paid with a rewards card, you can easily get between $ 500 and $ 1,000 a year (or more) cash rewards or even free airline tickets if you use a travel reward card. .
3. Manage employee expenses. Business credit cards can be configured to limit employee expenses, making it easier to manage employee spend in the field.
4. Using a business card helps you create credit for your business, which is of utmost importance in today's economy.
As you can see, there are several great benefits to using a business credit card for your business.
A useful index for those who want to establish a commercial credit: try to be approved based on the creditworthiness of your business rather than your personal creditworthiness.
This means that you will avoid providing your social security number on the credit applications of your business credit card. If you do not get an approval based solely on your business credit, then you can try to apply and include your personal credit information, if any.