For many entrepreneurs, creativity and drive is the easiest part; however, this is only half the battle. Being financially literate is a must if you’re going to start your own business, but if you’re a little bit unsure, don’t sweat it. It’s never too late to learn tips to managing finances. One of the most important things a company owner can do is keep their personal finances and business finances separate. This is unfortunately a mistake many “newbies” make. The solution to this problem: business credit cards.
For those who are unfamiliar, a business credit card works very similarly to a personal credit card. You still have to pay off a personal credit card each month, you still have a limit, and you still have to be pre-approved. However, these credit cards offer advantages that are particularly enticing to businesses (as opposed to individuals). Consider some of the reasons a business credit card will help your startup company:
5 Benefits to Small Business Credit Cards
- Higher Credit Limit: Business credit cards cater to the small business by allowing for a higher credit limit. Technology and equipment is becoming increasingly expensive; however it is becoming necessary to stay in competition with other companies. A business credit card will give you the funds to afford these business necessities. Some cards have a credit limit as high as $75,000.
- Rewards Designed for Businesses: Just as with personal credit cards, business credit cards offer rewards. The great thing about these business credit cards are the types of rewards. The rewards cater to business needs—business travel, business supply stores, etc.
- They Allow You to Monitor All Activity: Many startup business owners fear that a company credit card will get out of control by employees or managers. However, these cards now allow owners to set limits on spending. The owner can decide the limits and whether they want to set them per day, per week, or per month. You can also program a code into the card to monitor where the card is used. If you’re concerned employees will abuse the card for non-business purchases, block them from using it at certain locations.
- Help to Increase Your Business Credit Score: Just as one would imagine, business credit cards help a business to establish credit. This works in the same way as a personal credit card—pay your bills on time, and you will be rewarded. If a company can manage their business credit cards, they will more likely get approved for small business loans, lower interest payments, and higher credit card limits.
- Separate from Your Personal Finances: As discussed above, the biggest benefit to a business credit card is the ability to keep business and personal finances separate. If for whatever reason your company fails, your personal credit will remain untouched. This will also help a company owner keep things organized and separate.Signing up for a business credit card is as easy as calling up your bank. Just about every bank offers business credit cards, and just as with personal credit cards. There are a lot of options that will depend upon the nature and size of a company, but banks are there to help. If you’ve decided that a business credit card is the way to go for your new startup, be sure to do your research and ask for help. In the end, you will find that this is a huge step in managing the financial side of your company.
Jessica Price is a writer and marketer for Calvin Klein Underwear retailer, Chonies. She also writes for various blogs and marketing communities giving startup companies financial advice. In addition to her 24/7 career, she enjoys spending time with her new husband, Hank.