It's a common enough question: Do you use your business credit card or personal credit card to pay for your business expenses? Unfortunately, the answer is no. Many business owners believe that if they have a business credit card or personal credit card that they can simply use it like a normal credit card and make purchases as if it was their personal credit card. While this is true to an extent, the two financial tools we use for our business and personal finances are very different and should not be treated as such.
The first thing you need to understand is that your business bank account is different from your personal bank account. You cannot simply write a check that will be funds your business credit card, because you will then have a payment from your business account and not from your personal account. It is impossible to fund your business credit card or personal credit card without a written order from your business bank.
Your business credit card or personal credit card is, first and foremost, a tool for business. It is a tool for business to advance its objectives through the advanced technology of the 21st century. This means that you must use your business credit card or personal credit card wisely – not as if it were a free lunch that you are entitled to, but as if it were a tool of the trade you were being asked to use. Make purchases where you will be able to pay promptly. When a sale is made, close your check book and do not charge back. These are very important management techniques that will allow you to build a solid credit history for your business.
If your business credit card or personal credit card is being used wisely, you will find that it becomes easier to get approved for lines of credit. You'll find that the interest rates will be lower, fees eliminated, and annual fees lower. Even with this, it will be wise to only charge what you absolutely need to pay. If you overspend, you will only make the problems worse. Instead, choose your purchases carefully and keep your business and personal cash flow under control.
There are a number of perks associated with credit cards, including special offers, reward programs, and air miles. However, when you use these things as tools for business, they can become a double-edged sword. Before long, you may find that you need them more than ever. This may be especially true if you have just opened your business. It is at this time that your business needs a credit card in order to stay operational. If you do not have one, now is the time to get one so that you can stay on top of your budget and finances.
You should know that the main reason that business credit card or personal credit cards are different is due to how they work. The business card is used for business related expenses. They are reported to the credit bureaus and therefore you have to pay them off regularly. The personal credit card is different because you are using it for your own purchases. Since it . . . . . . is your own money, you can spend it however you want.
Since the business credit card or personal credit card is a tool that is needed in today's business world, you should ensure that you know how to use it properly. Know how you are going to make the purchases, how much you are going to spend, and when you are going to spend it. This will help you in the long run. Also, make sure you read the terms and conditions associated with the business account since they may have specific rules regarding who can and cannot charge the account.
Finally, remember that if you need to borrow a lot of money, then using a business credit card or personal credit card may not be the best idea. You should always look for unsecured business loans instead. However, do not apply for too many unsecured business loans because this could get you into trouble. If you have money that you need to borrow, then consider the business credit card or personal credit card as a tool for business.