The Importance of Finding the Right Small Business Credit Card
There are dozens of decisions that must be made by a person who wants to start a small business. They include choices related to marketing campaigns, business models, personnel, pricing, and suppliers, just to name a few. But one of the biggest questions that must be answered is how the business owner is going to pay for all of it.
That’s why it’s vital that small business owners select the appropriate credit cards for the needs of their company. Here are some tips to help choose the right small business credit card.
●Look for low interest rates and high credit limits. When starting a business, you need to keep expenses as low as possible. That means not paying more interest on your credit card balance than you have to. But along with a low annual percentage rate, you should choose a card with a high limit – so you won’t be bumping up against your credit ceiling all the time.
●Shop around. Today, there are numerous sources where you can obtain a business credit card. Sure, it’s smart to start at the bank where you have your corporate accounts, because it may be more amenable to approving you for a small business credit card. But there are also plenty of credit card comparison websites that will make you aware of the latest promotional offers and rewards programs.
●Get your documentation together. The application process is more complex than the one-page form you fill out for personal credit cards. In addition to your social security number (and those of the people who will also use the business card), you’ll need your company’s tax ID number and maybe even some financial records to demonstrate fiscal responsibility.
●Find rewards that actually work for you. Credit card rewards run the gamut, so you should seek out programs that will have a direct benefit on your business. For example, if you will be traveling by air frequently, a solid airline miles program will help you earn free flights. If you’ll be needing business supplies, a cash back program may be your best option. Incentives for gasoline purchases might be something to look for if you’re driving a lot or have a fleet of vehicles.
●Know your payment deadlines and grace periods. Memorize this information or write it down in a place where you’ll be constantly reminded of them. There’s a good chance that you might be juggling invoices and bills from time to time, and you’ll need to know exactly when your credit card balances must be paid in order to avoid penalty charges or APR hikes.
●Make paying it off a priority. Don’t adopt the mindset that making timely payments is all you need to do to manage your small business credit card account. The more debt you incur on your balance, the greater your liabilities on your balance sheet. Plus, too much outstanding debt will have a negative effect on your business’s credit rating – which could lead to all kinds of problems down the road if you need a loan or more credit.
●Screen your cardholders carefully. It may be necessary to give corporate cards or account access to other people in your business. But before you do so, be sure you are comfortable with each person who has that power. If any one of them demonstrates poor judgment, ethics, or fiscal restraint, it could have devastating fiscal consequences for your company.
●Look for helpful online tools. Many business credit cards come with access to software that can assist you in running your business. Most card companies allow you to pay your bills online, but some are more user-friendly than others. A user interface that lets you easily spot transactions and aids in bookkeeping will make things a lot easier on your accounting department.
●Make sure it will work when you need it most. There comes a time with many companies where your business credit card becomes not only a necessity, but a lifeline. So do some research and ask other business owners about their corporate credit cards. After all, whether it’s a repair bill for equipment that keeps your production line running or a restaurant tab with potential investors, you don’t want your credit card rejecting a crucial transaction.
●Do not use it for personal purchases. Never, ever, ever. No exceptions. Repeat this mantra daily, write it in stone, tattoo it on your forehead – whatever it takes. Not only does this muddle your business accounts, it may give future litigants the legal ammunition they need to go after your personal assets instead of just your corporate ones.
Chris Martin has experience in writing articles about everything from how do you start a business in an uncertain economy to information technology and entrepreneurship.