If you are a small business owner, you have probably received business credit card offers in mail or e-mail. Most business men and women talk about the benefits of owning a business credit line, but many cannot really explain why you need to have them.
To put it simply, a business credit card is designed to fit the needs of business owners and in some occasion start-ups. These cards are not very much different than their consumer counterparts. But they allow businesses to have a dedicated credit line for themselves. In addition, if you are a one-employee limited liability company, you should always try to separate your personal accounts from your business accounts. Business checking accounts and business credit accounts allow you to do just that. Business card often do have more flexibility and rewards for business owners but for most part they work the same way as consumer credit cards.
One of the main benefits of business credit cards is realized in the accounting area. Small businesses and start-ups can spend less time managing their accounting affair and concentrate more on their core capabilities by using business credit cards. Besides, the tax process at the end of each year becomes more manageable by using business accounts. But business owners need to make sure they segregate business and personal expenses at all times.
Business owners need to make sure they:
o Keep the expenses separate at all costs. Your business checking account should be linked to your business credit card. You should not pay your business bills with your personal accounts.
o Acquire their expense reports from their business credit card companies every month to find out what they can do, with the help of their issuers, to make the accounting process more manageable.
o Ask their card issuers about the ability to manage credit accounts using software packages such as Quicken. These software packages are very powerful tools for managing accounting for small businesses.
At the end of the day, business credit cards are great tools for businesses to reduce the accounting overheard. They may come with more rewards or a lower APR but the real strength is the way they make it easy to manage a small business.