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Small Business CardsSummary: Do you need money to start your own small business? Before you apply for a personal line of credit that is forever attached to your personal credit rating, maybe you should compare many of the small business credit cards that are available.
Why Get A Business Credit Card?
Many people dream of owning their own business. You might have a product to sell, a targeted market and an awesome business plan. The only problem is that you don't have the money to fund the everyday expenses of the business. Many entrepreneurs solve this issue by using a personal credit card instead of small business credit cards. Although this might be the quickest way to start out your business, it probably isn't the most sensible one. Small business credit cards can help a new business owner to take care of the finances without the hassle of mixing business with pleasure.
CitiBusiness Gold Credit Card
Earn 1.25 reward points that never expire for every dollar you spend with the Citibusiness Gold Credit Card. Managing your business have never been so rewarding.
- 0% p.a. for 4 months (reverts to 20.74%p.a.) on purchases
- 0% p.a. for 4 months on balance transfers
- $74 (half price annual fee for the first year thereafter $149) annual fee
- 21.49% p.a. on cash advances
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
 Citibank CitiBusiness Gold | Earn 1.25 reward points that never expire for every dollar you spend and enjoy complimentary international travel insurance with this card. | 0% for 4 months (reverts to 20.74%) | 0% for 4 months | $74 (half price annual fee for the first year thereafter $149) | 21.49% |   |
 American Express Platinum Business Card | What some calls the ultimate business card. The AMEX Platinum Business Card does not come with a credit limit and thus allows you to better manage your cashflow during tight times. | $1200 | | |||
 American Express Gold Business Card | Earn a whopping 2 points for every dollar you spend on selected Qantas products and services. Also comes with no credit limit. | $169 | | |||
 American Express Qantas Business Card | $0 annual fee for the first year makes this card great for start-ups that want access to reward programs and the cashflow a credit card provides. | $299 | |
Separation is Key
A smart business owner should always keep all personal expenses separate from business expenses. This makes things much easier to calculate when tax season rolls around. Small business credit cards allow a business to put all purchases in the company's name and not combine them with the owner's own personal credit.
You will get a separate statement from the bank, allowing you to keep your books organised on the fly without having to worry about mixing business with pleasure. Thanks to your business card you can enjoy simplified bookkeeping.
One Day at a Time
Having said the aforementioned this does not mean that you cannot and should not start out by using your own personal credit line. Some of the most successful companies in the world were funded with a personal credit card. However, just like with anything else, a business grows and becomes profitable over time. Once your business becomes more stable and credit worthy, you should consider applying for a business credit card in your company's name.
Unfortunately, some business owners might have a bad credit rating which could impact their application process in a negative way. When you apply for a business credit card you can expect that the lender will look into your personal credit history. It is a good idea to request your credit file beforehand. Contact Veda Advantage for a free copy of your file. Credit card lenders also use additional criteria such as on-time vendor payments to determine if your company is credit worthy and can be trusted with a line of credit. If your credit rating is fine you should have no problems to getting accepted.
Differences in Cards
You need to understand the differences between business credit cards and personal credit cards. The main difference is that with a business credit card, purchases are charged to the company and not the owner. The owner is not responsible for repaying the money back, the company is. As with a personal credit card, business credit cards have credit limits, but with a little difference. A company has the ability to give different employees a company credit card with different credit limits. Usually, when companies assign credit cards to its employees, the management team has higher credit limits than regular employees to protect the company's assets.
Any charges that are made with company credit cards are the company's liability. The company has to keep track of all charges and make payments on a monthly basis. Many business company cards have management tracking reports that make this process flow much smoother for company owners.
Create a budget
When you finally decide to take your business to the next level and apply for a business credit card you should make sure that the company's credit history is in good standing. One of the most important things that you can do is to make a budget early on. You should have a listing of all expenses that are payable and their due dates. Track your revenue and make sure that you have the cash flows to pay your bills on time on a monthly basis. This is the best way to make sure that your credit history will not become tarnished along the way. Use simple spreadsheets to track your money. After a time (and once you can afford it) you can move to more sophisticated accounting software.
Temporary cash flow
You can manage your cash flow and keep track of your credit card expenses by developing a smart mindset that will help your company in the long run. Do not use your business credit card as if it is a debit card. Your company card should only be used for necessities that your regular cash flow cannot handle at this point in time; you might have flaky clients that either don't pay you on time or in the worst case scenario, never pay you.
Your card can help pay for expenses that need to be taken care of right now, before the payment from clients hits your account. A business credit card can be used as the temporary cash flow needed to get you through a gap between income and expense. Once you receive your income you should pay down your credit card debt immediately to avoid high interest rate charges and fees.
Emergencies
"A business credit card can be used as the temporary cash flow that you need to get you through."
You never know when your business will need money for an emergency. Where will you get the extra cash if the company car break down or the air conditioning unit needs fixing? A business should have a source of money just in case something unexpected presents itself. A business credit card makes this possible.
In conclusion, most people want to start their own business, but they don't have the funds to do so. Many have been known to start their business with their own personal credit. Although this is a viable option, business and personal expenses should be kept separate. It may be necessary to start your business by using your own credit, but once the business becomes profitable, you should consider one of the many available small business credit cards that are available. This will give your business the boost of professionalism that it needs.
