As a small business owner, there are instances that you will need extra resources to pay for urgent purchases or emergency expenses while managing your own business. Getting a credit card for business is one of the best option. However, it is important to know when and how you can use this type of credit card. Below are some tips on how you can use your business credit card wisely:
Use your business credit strictly for business. Business owners sometimes tend to use their business credit cards for personal spending such eating out at restaurants or grocery shopping. This is definitely a no-no. If you own a credit card for business, you need to be very strict about the kind of expenses you charge on your card.
Make sure that your business credit card is used for business expenses only. On the other hand, your personal credit should be used only for your personal needs. Know your limits and always exercise self-discipline.
Choose the card that suits your business. Different business credit cards are designed to help different types of businesses. It is your job to find out which credit card for small business caters to the specific needs of your company. You may need to take some time researching about the many small business credit cards available in the market, but taking your time is a smarter move than getting a card that is wrong for your business.
Set a limit to your business spending. Just because you own a company does not mean you can use your business credit all you want. Be wise. A smart business owner sets up a realistic budget that must be followed. Keep in mind that a business credit card should be your partner in keeping your finances more stable and steady and not the opposite.
It is too easy to splurge using a card and get stuck in huge debts later on. Do not forget that each time you charge a purchase to your business account, you have the obligation to pay it back by your due date. Never use your business credit card if you have doubts that you can pay it back on time.
Check your account regularly. Apart from the monthly statements of account and the quarterly and yearly summaries sent by your credit card company, credit cards for small business provide an online account access for its card holders. Thus, you can check your account right from your home office or wherever there is access to the internet at any time. Take advantage of this opportunity to keep track of your charges and to make sure that you are staying within your budget.
Pay your monthly balances in full. A wise entrepreneur knows the value of paying debts on time. Never carry over your balance for the next month if you already have the means to pay it off completely. Remember, it is better to keep your credit to debt ratio in a balance to keep your business credit in excellent standing. Paying off your monthly balance in full protects you from the risk of bad debt and incurring additional interest rates and penalty charges.