Many small medium business entrepreneurs, especially the ones that work from home have been used to merging business expenses and personal expenses into their personal credit cards without really thinking of the consequences it might have for their finances later on. In starting up a business, combining buys for the business and purchases for self consumption may not really matter. But when the business grows and requires bigger and more regular spending, a separate business card will seem like the best option. In fact the business owner may regret not acquiring one earlier.
First, a business credit card means a more manageable way to track expenses. Just imagine if the business owner receives a billing statement detailing all the expenditures charged to one personal credit card; would it not be a confusing situation. S/he would have to sit down, get a pen and a paper and start encircling and categorizing purchases first according to whether it was for the business or for personal needs, then according to tax and non-tax deductibles, and so on.
A separate business credit card does not allow this situation to happen. The business credit card company can provide the businessman with a monthly billing statement, plus quarterly and yearly reports of the account. These statements include a detailed outline of all purchases made in the past month, or in case of the annual statement, expenses incurred within the past year. These expenses are all sorted out and the cardholder can use it as reference for accounting and bookkeeping tasks.
A business credit card holder is also given the option to check his account online. Statements for this credit card been downloaded to numerous accounting software, making that chore less of a hassle. A business owner or his accountants can actually get rid of numerous receipts and statements, making everything easier.
A business credit cards separate from a personal credit card also allows fro separate credit build up and credit history. A business owner should take into account the fact that the business may or may not flourish. In case a business does not thrive and goes into heavy debt, it would be best if the business has its own credit. If the business owner fails to have a separate account for the business and the business dies down, his or her personal credit is sorely affected by all t the debts incurred by the business.
In case the business does flourish, then it would still be advantageous to have a separate business credit card for it as the business’ credit is not encumbered by all the pother personal purchases, making it more viable for better financial deals from credit card companies and various private financiers.
In the end, there are just more advantages than disadvantages in separating a personal business credit card and a business credit card. Untying personal from business means a better way of tracking finances and building none merged credit histories and scores. If you are starting up a business or are engaged in one right now and you still do not have a separate business credit card, then it is time to get one now.