Very few people run their personal finances without a credit card. It only makes sense that your business should have one too. According to the National Small Business Association, credit cards account for the largest single source of financing for small businesses. They can help establish credibility and create a professional image. If you’re just starting a business or if you’ve been holding off on applying for a credit card, here are five reasons you should make obtaining a card a priority:
- Maintain Separate Finances: Maintaining clearly separate accounts for business and personal use will keep both your accountant and the IRS happy. It facilitates accurate, easy-to-understand records. Many credit card companies sort and organize transactions into expense categories, which helps you track your expenses. It’s far better to use your business credit card to purchase that new office chair than to buy it on your personal card and pay it off with a business check.
- Make Purchases: In addition to the convenience of making a spontaneous purchase (say, when you see printer paper on sale at the local big-box store), a business credit card is useful for online purchases and is almost a necessity for buying a plane ticket, renting a car, or reserving a hotel room. Even if you haven’t ever traveled for your business, you want to be ready if the opportunity arises. Finally, credit cards are a convenient way to pay recurring bills.
- Get Rewarded: Many issuers reward customers with discounts and awards points, often on cards with no annual fee. Awards can usually be used the same way as cash. Other perks can include discounts on office supplies, gas, and travel. Many rewards programs are customizable. Set them up to fit your needs and take advantage of the rewards to cut your expenses.
- Build Credit: You can build your company’s credit the same way you build your own. Using your credit card wisely is one tool. Establishing good credit will smooth your path in the future if you need to expand a loan or a line of credit for expenses.
- Be Prepared: It isn’t as quick and easy as it once was to get a business credit card. Preapproved credit cards and invitations to apply for credit aren’t flooding business mailboxes as they once did. Online applications are no longer accepted, unless the company has already invited you to apply. Some companies, like Wells Fargo, state on their Web sites that you must apply in person. Other companies will let you apply over the phone. It’s a more involved, time-consuming process than it was just a few years ago, so don’t wait until you need the card.
Gather your business papers and apply for a credit card in the name of your business now. While you’re at it, apply for another card with a second provider so you have a backup. If something happens to your first card, you won’t be left empty-handed.
Ellen Craig is a technical writer who has contributed to periodicals, Web sites, and high school and college textbooks. She can be reached at firstname.lastname@example.org.