To open a business credit card account or not to open a business credit card account; that is the question many small business owners find themselves asking on a regular basis. Do I or don’t I? Should I or shouldn’t I? It’s a great question, and it’s not a stupid question (my parents always taught me that there is no such thing as a stupid question, but I beg to differ. If people ask me one more time how I can tell the difference between my twin son and my twin daughter, I might just show them. That’s a stupid question that begs for another anatomy lesson).
Business owners often have a few misconceptions regarding their accounts and how to handle them. We know we don’t like debt and most of us are not happy to open up accounts left and right, but there are a few things you should know about business credit cards. For one, it’s not always easy to get them. Citi Bank makes it all but impossible to get a business credit card without first handing over your newborn baby, but their security measures are refreshing. Other companies aren’t so stringent with the application process and the rules, though in cases where financial difficulties arise, business owners may find themselves seeking assistance from an insolvency practitioner similar to the ones at https://insolvencypractitioner.org.uk.
If you have a business of your own, you might want to know that getting a business credit card is often the best solution to your small business needs. We know you might think that it’s not right for you, but hear us out and maybe learn a little something along the way.
Business credit and personal credit are not the same
One of the biggest excuses we hear people use when they decline the offer of a small business credit card is the fact that they don’t want their business credit sitting on their personal credit profile. The good news is that it doesn’t. Of course, you do need your personal credit to use as a reference when opening business credit, but that does not mean you’re suffering. You’ll take a small credit hit to your account for the inquiry (five points, max) but your business credit will always remain separate from your personal. This means your lenders won’t see your business credit on your personal report when you apply for a car note or a mortgage.
It makes taxes that much simpler
I’m self-employed, and I hate tax time with a passion you might not even understand unless you also hate tax time. It is not always easy to keep my business expenses separate from my personal expenses, meaning that I’m not always able to get my taxes done as quickly as possible.
For instance, my computer is literally my lifeline for working at home. I use it every single day. The same goes for my iPad Pro. It sits next to my laptop in my home office and it allows me to see research and type at the same time. There are things I use at home for work all the time, and only for work. Since use my phone for any of my internet needs, I only use my iPad and my computer for work, therefore making them only work items.
For me, it’s far easier to pay for my work-related stuff, such as getting my laptop repaired for the 3rd time in the six months I’ve had it so that I need only look at my credit card statements for the year on my business card at tax time. It saves a lot of work, research and categorizing on my personal card when it comes time to filing my taxes.
For your protection
The biggest reason a business card might be right for you is your personal protection. Many business cards are world cards, which means they offer more protections than your personal credit card. For instance, you might notice that you have longer warranties, and better rental benefits and insurance benefits when you travel or rent a car. These might not seem like such a big deal, but these are the types of protections that work well when you are a business owner paying for a trip for business purposes.
Perhaps the biggest reason to secure a business credit card is to use the perks. There are several very good ones, and it’s always worthwhile to spend a little time looking into it. For instance, why not choose to apply for a business credit card that allows you to save money at certain vendors associated with your business? Many cards offer business perks such as travel discounts, lounge membership and even discounts at major office supply stores.
In short, keeping your business finances and your personal finances separate is always the best case scenario. However, it’s not a decision we can make for you. It’s one you have to make for yourself when it comes time.
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