Separating Business Finances from Personal Money: Business Credit Cards

Tips & Caveats


Separating business funds from personal finances should be every interior designer’s concern. Surprisingly, not many designers take this matter into serious consideration. For instance, many interior designers prefer to use their personal credit cards for their business expenses thinking that it makes no difference. But a wise interior designer should think about the long term complications that combining personal and business funds in just one account could cause later on.



At the start, you may find that using your personal credit card is enough. But as your design firm begins to grow and accumulate expenses, having a separate business account is indispensable. It will make a big difference not only in managing your business finances, but also in making finance-related decisions. In this article, let’s talk about the advantages of using business credit cards for your business expenses.



 
Business Credit Cards Means Easy Management

Why would it be easier to manage business finances using business credit cards? Because all your expenses are automatically included in your summary of accounts so you can be assured that you won’t miss recording a single purchase no matter how big or small that purchase was. You will be provided with monthly billing statements, along with quarterly and yearly summaries of your account.
 

These account summaries contain a detailed list of all the purchases you’ve made during the past months or the entire year. Purchases are also categorized so you can use it as reference to your bookkeeping and accounting tasks. Filing your business taxes is definitely made easier with the help of business credit card account statements.
 

Add to this, many business credit cards include the option to access your account online. This is an enormous help for a busy interior designer as it enables convenient tracking of business accounts at any time. Even as you work on your desk, you can simply log in to your online account and do your checking within just a few minutes. Account summaries are also downloadable so you can use them along with your accounting software.


 

Build Business Credit with the help of Business Credit Cards

Another important advantage of getting a business credit card is to build a separate credit history for your business. Don’t forget to register with a business credit bureau such as D&B or Experian to begin establishing your business credit immediately. By using your business credit card and keeping up with your payments on time, you can be assured that you will be building excellent credit history for your company.

 

Every business is confronted with financial challenges sooner or later. You may not need financial assistance at the moment but by the time you need to apply for a business loan to help you with your business projects, having a solid business credit history will help you secure an approval more easily. Aside from getting easy approval with your applications, having excellent business credit also guarantees that you’ll be offered better rates and terms by lenders.

 

In summary, getting a business credit card is beneficial in two ways- for separating personal from business finances and for building up a separate credit history for your business. If you’re a interior designer or planning on starting up a business of your own, this matter is definitely worth the thought.




Precautions for Using Credit Cards to Finance Your Business

Although there’s nothing wrong with using business credit cards, relying on them as the only means of financing your business poses a great risk. Let’s discuss the necessary precautions that you should consider when obtaining business credit cards.


Credit Cards for Business – The Caveats


Overspending

What are the consequences of using business credit cards? First, there is the tendency to overspend. Since it’s so easy to charge purchases on a credit card, a interior designer may not immediately realize that he has already been maxing out on his credit line to shoulder business expenses. There may be times when even personal expenses are also charged to your business credit card. By the time your billing statement arrives, you may be surprised to find out how big the charges are on your account.

 


High Costs

Overspending or maximizing credit brings forth another complication. Because the charges are too high, you may not have enough cash to pay off your monthly balance in full. Instead, you may be forced to pay only the minimum due. Why is this risky? Don’t forget that each time you carry over your balance unto the next billing cycle, you also incur high interest rates on your account. This is the reason why many business credit card holders are facing huge credit card debts.

 


The Wrong Credit Card

Another challenge that interior designers face is choosing a business credit card that matches their needs and spending. Choosing the right card is crucial especially when it comes to credit cards that offer rewards. It’s so easy to get enticed by low interest rates and big rewards but if the program doesn’t suit your business, you may find that you’re not really getting the incentives you expected.

 


Jeopardize Your Business Credit

Business credit cards can be tools for building a separate credit history for your company however, this depends on how well you use your business credit card. For instance, if you’re often late in submitting your payments or if you’re in the habit of maximizing on your credit limit, you may doing more damage than good to your business credit.

 


The Effect on Your Personal Credit

Unless, you’ve already established your business credit, your personal credit history will also be affected with the way you handle your business credit card. As the owner of the business, you have the responsibility and obligation to pay for all charges reflected on your business account. This means, late payments on your business credit card will also pull down your personal credit score and affect your credit worthiness.


 
Use Your Business Credit Card Responsibly

Clearly, your success for using business credit cards in financing your business greatly depends on how well you take on your responsibilities as a card holder. Needless to say, credit cards can assist you with your business spending but it’s still important to seek traditional ways of business financing to reduce the risks.

 

By Pamela Williams
Photography by Rick Becker-leckrone


Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Visit http://www.BusinessCreditCardSite.com
 

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2 comments:

  1. I am looking forward to reading your article Separating Business Finances from Personal Money: Business Credit Cards and read other posts soon.

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