Every small business needs a credit card that is attached to it. Regardless of what products or services you offer, this is important. You want to provide your business with all of the elements it will need to survive in this competitive market. You also need to have some form of financial access for your business when you need something in a hurry.
Too many small business owners fail to see why they need one. They may be content with using their personal credit cards and then paying that bill when they get income from the business. You want to keep your finances for each one separated though. You also need to work to establish some credit for your business. Hopefully it will be able to expand and take on a life of its own.
Having some form of credit for the business allows it to really be seen that way in the eyes of lenders. What happens two years from now when you want a loan from the bank to pay for a new building since you have outgrown the other one? You don't want them to view your business as a high risk due to no credit being established for it yet.
There will always be items you need to buy for any small business. Using a credit card for them and then immediately paying it off shows you to be responsible with that credit. As a result you will see your interest rates dropping and your credit limit increasing. You don't want to get into the habit of carrying a balance on the business credit card unless you absolutely have to.
Once you do so you pay off that credit card balance. Try to keep your balances low so you will have the credit you need available should something come up. Always stay on top of what your credit card balance is for the business. Be very selective in what you decide to charge on it. You only want it to be necessities so make sure you have a clear understanding of what they are.
With a business credit card, you can get out from under the problem of relying on your personal credit to help the business. You don't want to risk losing your home or other assets should your business fail. Even the best plans for a successful business can turn out differently then you planned. You can always move on to another business or work for someone else. However, you don't want to ruin your personal credit in the mean time.
Take your time to shop around for the right credit card for your type of business. Don't expect to get an unbelievable deal from the very start. New businesses are high risk so your rate of interest will be high. Yet if you pay the balance each month it won't hurt you. Find out what special perks they can offer you as well such as cash back rewards programs.
Credit cards are very important for small businesses so get at least one in place as soon as you can. You never know when you will need to access that credit in a hurry. Even if you don't get the best terms or credit limit to start with, do what you can and work to improve from there. Establishing your business credit takes time but getting a credit card is a sure way to get the ball rolling.
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