Every business owner knows that running a company can be hectic. For example, bookkeeping can become a demanding task. Another severe chore is keeping track of expenses. Many choose to use a credit card to conduct company transactions, as month-end statements make it much easier to track expenditures.
Many companies offer business-oriented credit cards in the market. However, business owners often avoid such a card, thinking that it may compromise many of the benefits offered on cards for personal use.
Therefore, should entrepreneurs continue using their cards or switch to business credit cards to make purchases for their company?
Using Personal Credit Cards for Business Purchases
Yes, using a personal credit card for business transactions is possible, and it even has some benefits. One of the most important reasons for using a personal card is the CARD Act of 2009. The act prevents credit card providers from charging higher fees and increasing interest rates than personal cards are subject to. Business credit cards do not enjoy these protections. The second reason relates to the rewards and benefits of using a personal credit card. There is almost always an incentive program to encourage the use of personal cards.
On the other hand, business cards do not offer as many benefits as personal cards. There might be some offers intended to attract businesses, such as the ability to purchase office supplies at a discounted rate. However, it might still not be a lot.
It would help if you researched what benefits suit your business and chose a credit card based on those benefits, whether personal or business.
Do Not Count Out Business Credit Cards
Although the prospects of choosing a personal credit card sound desirable, you should not dismiss the possibility of getting a business card. There are certainly many advantages associated with getting a business card, and the additional services offered with many business cards might be just what your company needs.
A typical example is a business handing out credit cards to its employees. Most credit card providers facilitate this need by providing multiple cards associated with a single account. On the other hand, personal credit cards are for individuals and do not offer these services.
Another advantage of business cards is spending more than one could on personal credit cards. This is useful, especially for companies with a lot of monthly expenses they need to put on their card.
Suggestions for Success
Now that you know both sides of the story, it is recommended that you take a close look at the structure of your business expenses. Once you have assessed the needs of your business, you will be able to conclude which card (business or personal) is a better choice for being used in your company’s operations. Once you do get the card you want to use for business, keep the following suggestions in mind:
- Do not mix business and personal cards, leading to messy bookkeeping.
- Use the tools your credit card company provides to keep track of your business’s expenditures. This is the main reason businesses go for credit cards. It is recommended that you do not ignore this suggestion.
- Build healthy credit habits. These include paying the credit card bills when they are due and in full. Remember that you are using a credit card to keep track of your expenses and that it should be your priority to avoid interest payments and maintain a good credit score.
Conclusion
Using a credit card to keep track of business expenses is always a desirable option. When choosing a card you will use in your business operations, it is always wise to look around for what is offered and at what price. Having healthy credit habits to use the card fully without incurring unnecessary liabilities is also necessary.
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