A business credit card is an essential part of managing your online business. For starters (and the tax man), you must keep your personal and business expenses separate.
Now, your "business credit card" does not necessarily need to be one that is specifically designed for small business. It can be a consumer credit card that you use only for business expenses.
Much of the information for this article comes from an interview I had with Curtis Arnold, one of America's foremost authorities about credit cards. I promised to plug his book scheduled for publication later this year, but it doesn't have a name at the moment so you'll have to check back on that.
Beth and I always begin each year with a budget that we develop using a spreadsheet software (Microsoft Excel in our case). We have a personal budget and a business budget.
Life requires flexibility in budget preparation, but it does not require moving items from your personal budget to your business budget and vice versa. Those should always be separate. If necessary, set up a loan account for your business. Then you can loan yourself funds when needed. Just be sure to pay them back to yourself.
One way to avoid loaning money from your personal budget to your business is to have a credit card designated for business-only expenses. This has several advantages for you and your home business.
- It allows you to continue paying your operating expenses while awaiting payment. My website business is a good example. I usually get a "downpayment" when the agreement is signed. Of course, depending on the size of the site, it may be several weeks before I get a second payment. The final payment comes on approval from the customer when the site is completed.
- If you obtain a credit card in your business name, it allows you to begin building that all-important credit history for your business. A good credit rating for your business will stand up for you as your progress.
- Most small business credit cards furnish an annual report at the end of the year that shows all your expenses. That report can be very beneficial at tax time, and it gives you additional documentation for your business expenses.
Caution: Do your very best to pay your credit card bill in full each month to avoid interest charges.
Additional Benefit of a Business Credit Card: While Beth and I were Christmas shopping in 2006, I accidentally handed my business credit card to the clerk. She looked at it and said, "Arkansas Web Designs, I've heard of you."
Of course, I quickly gave her another card...but talked for a moment about web design. Not a bad way to soft sell your business, even if it was accidental.
To learn more about small business credit cards available to you, you may wish to visit:
http://www.creditcardsforamerica.com/small-business-credit-cards.html
Additional article of interest:
Home Business Success Story - Advanta