Effective small business credit card management
One of the more common mistakes a small business owner can make is that of co-mingling personal and business funds. This mistake could potentially cause an LLC or corporation to lose its “liability” veil, thereby allowing a creditor the opportunity to come after a business owner’s personal assetts. The easiest way to fall trap to this mistake (of co-mingling funds) is by failing to get a separate credit card for your business expenses. Just think about all of the little expenses you do or will incur, which must be paid be credit card, i.e. domain name registration, site hosting fees, etc.
Using a dedicated credit card for business purchases also makes it easier to itemize expenses for accounting purposes, and helps to build “credit” for your business. Many business owners also find that use of a cash back credit card allows them to save up to 5% on many company expenditures.
Of course, the disadvantage of acquiring a business credit card is the potential of its abuse. To be an effective financial tool the credit card must be managed properly. Here are a few suggestions for effective money management:
1) Most important - You must avoid late payments! All advantages of business credit card are quickly over shadowed when high interest rates and late fees plague a business owner.
2) Do not sign up for too many cards in an effort to take advantage of some special offer. Opening up too many lines of credit can have a negative effect on your credit score.
3) Don’t use the cash advance feature. Cash advances come at the cost of high interest rates and heavy fees.
In sum, be moderate and responsible! I would also advise that you really shop around too find the right credit card; one with a helpful reward, low interest rate, and user friendly terms. There are many informative credit card comparison sites online, which can help to make the research process fairly fast and easy.