Using a credit card for your business
February 20, 2015

Your small business has a number of expenses. Using a credit card that is intended solely for business purchases is good practice for your operation's continual success.

Benefits of a business credit card
One of the most substantial advantages to setting up a credit card for your business is that you will increase the amount of credit you can use toward purchases, according to Small Business Trends. Using an alternative option, such as your own personal card, chips into your available credit for both personal and business expenses simultaneously. This is a disadvantage to both your own finances as well as your business's.

In addition, you can allow employees to use the credit card for business-related expenses. However, you can also monitor how, where and when spending is taking place. This gives you more control over the finances of your own business.

Just as a personal credit card allows you to earn rewards, your business can benefit from cash back or points toward travel. For example, these can be used toward sending employees to an educational conference and helping your business continue to grow.

Business Pundit also noted that a credit card for your operation can give you a little more protection with identity theft coverage and other security features.

Responsible use of your card
According to Inc., ensuring that you and any staff that has access to your available credit use it wisely is crucial to obtaining any of the benefits associated with having a card. Make timely payments and always keep track of all expenses.

"It's more important now than it has been in years to make sure your personal credit rating is in good shape if you're looking for business credit," said Beverly Harzog, financial journalist to Inc. "If your business doesn't have much of a track record financially, it's very unlikely you'll get a loan from a bank, who have become very tight on funding new businesses over the past few years."

In addition, monthly statements are especially valuable to businesses. Monitoring your spending habits can help you get a better grasp of what you can continue to afford, what adjustments you should make to your business's financial patterns and tendencies and establish a more accurate budget.

It is also incredibly important to understand when it is alright to accumulate debt. Inc. recommended only spending additional money that may put you in the red if it will ultimate increase your overhead. For example, if you decide to move your business to a new location that may be more expensive, but it gives you the potential to reach a wider audience and increase your volume of sales it may be fine to tap into your line of credit.

Nexus: G-WEBCD6