Every business owner knows that many aspects of running a company can get hectic. For example, bookkeeping can become a demanding task. Another serious business chore is keeping track of expenses, so many choose to use a credit card to conduct company transactions. Month-end statements make it much easier to track expenditures.
Many companies in the market offer business-oriented credit cards; however, business owners often avoid using such a card, thinking it may compromise many benefits offered on personal use cards.
Therefore, should entrepreneurs use their cards or move to business credit cards to make purchases for their company?
Using Personal Credit Cards for Business Purchases
Yes, it is possible to use a personal credit card for business transactions, 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. Some offers might be intended to attract businesses, such as purchasing office supplies at a discounted rate. However, it might still not be a lot.
It would be best if you did some research to check and see what benefits suit your business and choose a credit card based upon those benefits, be it a personal or business card.
Don’t 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 a lot of advantages associated with getting a business card. 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. This need is facilitated by most credit card providers who provide 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 associated with business cards is spending more than one could on personal credit cards. It is useful, especially for companies with many monthly expenses they must 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’ve assessed your business’s needs, you can conclude which card (business or personal) is better for your company’s operations. Once you do get the card you want to use for business, keep the following suggestions in mind:
- Refrain from mixing business and personal cards, leading to messy bookkeeping.
- Use the tools provided by your credit card company to keep track of your business’s expenditures. It is the main reason enterprises go for credit cards. It is recommended that you don’t 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 it in your business operations. It is always wise to look around for what is offered and at what price. Having healthy credit habits to fully utilize the card without incurring unnecessary liabilities is also necessary.
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