Having your own small business is a dream come true for many hard working individuals. They want the freedom of working on their own and doing things their way. In most cases there are years of working for someone else under their belt that they can draw experience from. There are more small businesses than ever with the ability to open one online as well.
Credit cards are very important for every small business to have. This doesn’t mean you use your personal credit card to buy what you need for the business. It means that you have at least one that is in the business name only. This is the perfect way to start establishing a solid credit history for your business.
It the eyes of other people and other lenders, the fact that you have initiated some form of credit for your small business says a lot. Statistically more than half of all small businesses will shut down during the first year. Lack of income and lack of planning are the leading reasons for this. With a business credit card it shows you plan to stay around and that you have a plan of action when you don’t have money readily available to use.
A credit card for your small business gives you a way to buy essential items you may need but not have the money for. You may need to invest in various types of equipment or materials so you can generate more sales. You don’t want your production to be halt due to a problem coming up and you have no way to financially resolve it. Having a business credit card to use quickly and get back into action can be vital to the survival of a small business.
Once you do so you pay off that credit card balance. Try to keep your balances low so you will have the credit you need available should something come up. Always stay on top of what your credit card balance is for the business. Be very selective in what you decide to charge on it. You only want it to be necessities so make sure you have a clear understanding of what they are.
With a business credit card, you can get out from under the problem of relying on your personal credit to help the business. You don’t want to risk losing your home or other assets should your business fail. Even the best plans for a successful business can turn out differently then you planned. You can always move on to another business or work for someone else. However, you don’t want to ruin your personal credit in the mean time.
Don’t just apply for the first business credit card you come across though. Find out what the eligibility criteria is for it. Find out what the rates are, fees, penalties for late payments, and incentives for being responsible with the credit you are extended. You want to find the right deal for type of business needs.
Credit cards are very important for small businesses so get at least one in place as soon as you can. You never know when you will need to access that credit in a hurry. Even if you don’t get the best terms or credit limit to start with, do what you can and work to improve from there. Establishing your business credit takes time but getting a credit card is a sure way to get the ball rolling.