Business credit card brings flexibility as well as convenience to your business. When you start your business, you may decide to use your personal card for the small needs of businesses. However, once your business starts growing, you can look for a business credit card.
Here are some methods of managing your card effectively –
1. Keeping your cash flow smooth – Every small business faces a challenge of meeting the daily expenses. Sometimes your small cash on hand may not be enough to cover them. In such situations, you can use business credit card to meet some of your expenses. However you should remember to keep their expenses under control. It is very easy to overspend with the help of such cards. When you spend from your card, you should quickly put back that money in time.
2. Building up credit for your business – You can build credit score for your business easily with the help of these cards. This can be done in two ways – pay the outstanding balance in time and avoid using more than sixty per cent of credit allotted to you.
3. Tracking your business expenses – You can use monthly billing statements to monitor your expenses. While preparing your return of income, you can cross check the entries on your credit card statement with your accounting records to ensure that everything is included.
4. Accumulating rewards – Credit cards offer different types of rewards. If you have to spend a lot for your business, pick a card which offers good rewards. You will collect rewards of much faster than your personal credit card. As these rewards are not taxable, you can use them either for business purposes or for your personal spending.
5. Using card for business purposes only – Make a point to use your card only for business expenses. This will help you when you prepare tax return.
6. Avoiding cash withdrawals – There will be huge fees and interest charges for withdrawing cash from your credit card. So you should avoid cash withdrawal as far as possible.
7. Making full use of the grace period – You are generally allowed a grace period of 21 days before the due date for payment. You can use credit card money instead of checks for adjusting your cash flow.
You should always look at your card as the privilege and avoid the devastating effects of its mismanagement.