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When to consider getting a small business credit card

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Many small business owners debate over when the best time to get a small business credit card is.In reality, this can be a tough question.Credit cards can be very dangerous for any business, whether established or brand new.Credit cards generally charge high interest on late payments which could burry a new company in insurmountable debt.Companies should take extreme caution when starting a business with just credit; however, companies that do not plan on using a credit card instead of a bank loan or other form of start-up capital may consider getting a small business credit card right away.

Shows Business Stability and Confidence

Small business owners that get a credit card specific to their business show that they are serious about their business.The IRS is more convinced by companies that have a designated credit card than they are by small business owners that use a personal card for their business expenses.The IRS is less likely to be suspicious of a business owner's designation of purchases when all of the business purchases are on one card.

Stay Organized

By getting a small business credit card, businesses will be able to track their expenses much more easily.Instead of having to go through a credit card statement and what could be hundreds of receipts, small business owners will be able to know that everything purchased with the business credit card relates to the business.This will prevent claiming certain purchases that are not business related as business expenses which could cause problems when it is time to file taxes.

Build Business Credit

Just like a person with a credit card can build their own personal credit, a business with their own designated credit card can build their own credit.This is very important for young businesses to begin doing so that when it is time seek out capital for growth and expansion, the business will have the credit to command the necessary loan.Creating strong credit will also show possible investors that a company is responsible and organized. Having strong credit serves as a sign that a company is becoming established and is safe to invest in.

Credit Card Incentives

Many business credit cards offer incentives for their use.Companies that get a credit card to purchase many of the items they need when first starting and to keep the company running smoothly will be eligible for huge rewards from the credit card.Generally, a company would find a card that offers a reward that would be beneficial to the company, but that decision is up to the owner.

Money Management

When a small business plans on having employees making purchases, having a credit card can help a small business owner keep control of how much employees can spend.This can help protect a company against dishonest employees or simply to try and keep to a certain budget.Business owners could adjust the limit on each of their employees' cards to make sure all major purchases were run passed them for their approval.

While it may not be very smart for a company to rely on a credit card for all of their start-up needs or to use to start a company on credit, credit cards can be extremely useful right when a business begins to function.As long as the payments are made on time, the company stands to only benefit from having a credit card right away.

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