Although small business do benefit from a business credit card it is important and imperative to manage the business credit card effectively.
To begin with your business card and its offers will be primarily based on your personal credit score and report.
As a business entrepreneur you too must check about the credit card companies and their reporting credit agencies. The common agencies are Dun & Bradstreet, Experian, Business Credit USA, and Equifax. Before accepting a card it is important for you to check interest rates, offers, and rules and regulations pertaining to each card and always choose one that suits your needs and is most economical.
A business credit card will help streamline you fiancé management and keep separate personal and business accounts. It will help you build a descent business credit history that will spur your business activities to higher levels.
1. Always apply for a business credit card with a financial institution or bank where you have an established business reputation. This just means faster approvals and greater credit limits.
2. Never apply for more than one business credit card. Card hopping just has a negative effect on your financial standing. Furthermore, managing multiple cards can be a problem.
3. A business credit card is what must be used over a personal card for all transactions involving your business. For IRS purposes and easy accounting all business expenditure must be made through the business credit card.
4. Find out from the business credit card company whether they provide an itemized bill at the end of the financial year. A categorized and itemized detailed summary of transactions will make the bookkeeping process easy.
5. Prudent use of a business credit card will help you build business credit and stand you in good stead when you need credit lines or loans when your business expands and prospers.
6. Most business credit cards have reward schemes that offer clients facilities ranging from office stationary to travel and hotel discounts. Using the business credit card will help lower business expenses through use of rewards.
7. Providing employees with a business credit card will give you greater control of spending. And you as the employer can determine what the limits should be.
8. Most business cards will offer a 21 grace period after which you must steel all dues. To benefit from credit cards you must settle dues in full otherwise the interest payments will become a burden on your business. Stay away from late payments as it has a negative effect on your credit rating and report.
9. Use the credit card to make payments instead of checks it will help enhance cash flow.
10. Avoid taking cash advances on your card as it will escalate credit card fees and interest costs. Be smart and use business account debit facilities.
A business credit card is a privilege being offered by banks and other institutions. Be smart and prudent and the credit card will offer you many advantages. If you mismanage the credit card then you will be in serious trouble and on the road to financial ruin or bankruptcy.
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