Every small business owner knows how much stress you can get in the financial aspect of setting up a business. If you’re still using your personal credit card to cover the costs of your business, then it’s probably about time you find another method of handling your expenses. Here are seven signs that your small business needs a credit card!
You Mix Personal and Business Expenses Together
Generally, business expenses are tax deductible. However, the IRS is not going to allow you to deduct any personal expenses. It can be tricky to tell which one is a business expense and which one is a personal expense when you’re using only one credit card for both costs. It’s time to segregate the two expenses. This will also make your or your accountant’s life much easier and more organized when the filing period comes around.
Additionally, the separation of business and personal credit card records can be useful in case of a government audit.
Your Personal Credit Card Spending Limit isn’t Enough
If you’re constantly using your credit card to the limit monthly in order to keep your business operating, then perhaps it’s high time you should apply for the card. Remember that using too much of your credit card can be detrimental to your credit. The ideal credit utilization is approximately 30%. This is why it’s optimal to have a business credit card because it has high spending limits, which can give you additional breathing room.
You Need to Build Your Small Business Credit
If you have plans on expanding your business, you need capital in order to make sure that all expenses are covered. This is the part where your business credit card comes to the rescue. Funders will assess the credit score of your business in order to determine whether or not you are eligible for additional funding and an extra line of credit.
As long as you practice spending wisely and your small business has good cash flow, then if you have a business credit card, it will definitely improve your credit score. Not only that but having a credit report that’s not in the red can lead to you having more chances of financing approval with low-interest rates.
Your Business Incurs A Lot of Expenses
It’s a clear sign that you need to obtain a business credit card when your purchases have increased significantly over a short course of time. Expenses will expand continuously as your business expands.
Business expenses like employee lunch allowances or company dinners can dent your personal credit card. Having a credit card for official business activities can help you take care of major or recurring payments like inventory costs and rent.
Your Business Does Not Get a Lot of Rewards For Purchases
If you’re using a credit card that offers stellar rewards on groceries — and you’re running an IT firm — you might be using the wrong card for your business spending. Good news: Business credit cards offer some great diversity when it comes to the spending categories that offer the highest rewards.
Of course, there are numerous cards that offer great travel rewards and perks. But what if your major monthly purchases revolve around telecommunications services or office supplies? Personal cards aren’t going to help, but there are several business cards that have you covered.
Business credit cards often offer rewards that are tailored for business, and they help you earn rewards on common business expenses like office supplies, phone and internet services, gas, and dining. If your personal credit card’s rewards don’t align with your business spending, you should consider upgrading since you might miss out on valuable rewards.
You Have a Difficult Time Tracking Your Small Business Expenses
If you have a hard time keeping tabs and managing your company expenses, then you need to get business credit cards. A lot of employee credit cards have features that sync the cards with their accounting or bookkeeping system, which results in easier financial report completion.
Additionally, there are some company credit cards that come with an expense management feature wherein employees can turn in receipts and out-of-pocket expense notes that call for reimbursement, promoting accountability and transparency.
You Are Hiring New Employees
If you’re planning on hiring new employees and you are giving them permission to make business purchases, you’ll definitely need a the credit card.
First of all, you mustn’t share your personal credit card with your employees. This decreases the risk of credit card fraud and overspending on unnecessary things. There are many credit cards that feature unlimited employee cards on one business account without any additional cost. There are circumstances wherein you can include custom spending limits for each employee. This will make the activities of your employee streamlined in one monthly statement so that it’s more convenient.
Obtain Your Small Business Credit Card From REIL Capital!
Are you ready to get your hands on your business credit cards? Applying for one through REIL Capital is quick, painless, and hassle-free! With just a few requirements and steps compared to traditional lenders, you’ll be able to obtain your own credit card so that you’ll have more breathing room and ease in paying for business expenses. Apply now!
