Budding entrepreneurs often start up their businesses with their own finances, hitting up their personal account to pay for work expenses. But at some stage, you need to separate your personal finances from your work. Here’s how to choose a credit card just for your business.
1. Control your cashflow
Taking on a business credit card means taking charge of your company’s dollars. Because business credit cards often carry credit limits of $50,000 or more, you are now able to more easily cover significantly large purchases for work, instead of charging them to your own personal account or using large wads of cash.
It’s also cheaper to use a credit card than paying by cheque and it’s fairer on your employees, who may have had to dish out their own money for expenses. Petty cash receipts could be a thing of the past.
Most banks also offer you the ability to monitor your account online and use phone banking, so you can balance and transfer your business’ money 24 hours a day, as well as perform tasks such as ordering a new card or PIN, changing credit card limits, or cancelling or reissuing a card.
2. Peace of mind
You know that running a small business can be quite unpredictable, though investing in a business credit card can act as a safeguard during the peaks and troughs of your business cycle. Similarly, in the event of an emergency, your account will help you cover unforeseen expenses.
Banks also often automatically offer free insurance against fraudulent activity and unauthorised charges. If one of your employees makes a dodgy purchase, your company will be better protected. If you have an accident while travelling, you have something to fall back on.
Some banks even offer a 24-hour emergency help centre. The types of help can include things such as medical and legal referrals, lost luggage and document replacement, and in some cases you can even get emergency ticket replacement or emergency funds.
3. Cut down admin at tax time
No one enjoys slaving over bills and receipts when tax time rolls around. However, as business credit cards often come with management reporting features such as an itemised list of your company’s monthly purchases, you may find it’s much easier to track your company’s expenditure. Some banks also give you the option of receiving additional reports, itemising expenses such as travel and entertainment or a merchant category analysis to help you track the business spend.
4. One account, multiple cards
Business credit accounts can include multiple card holders, so you’ll no longer find yourself handing out your personal credit card to your employees to cover their work-related purchases. A single account statement for your spending activity across all linked credit cards makes accounting easier.
5. Interest free periods
Most banks give you the option of either taking up a business credit card that offers low interest rates or an interest-free period. In fact, if you use residential or non-residential property as security for a low rate card, you could potentially reduce your interest rate even further. There’s also often the option of using cash advance facilities, with some banks offering low interest rates for these advances.