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We all know that credit cards can wreak havoc on budgeting, but when managed correctly, they can actually benefit your finances and help you organize your business. Building good credit can help you when it comes to a variety of things such as buying or leasing a car, starting a business, and renting or buying office space. You can even score some really beneficial perks, depending on what card you choose! With that in mind, read on for four tips on using credit cards for your business.
Step 1: Determine which card is best for you.
Many cards have benefits like cashback, travel points, or money to spend at retail locations. Do your research and see what option is best for your lifestyle.
Here are some questions to ask yourself:
Do you fly on a particular airline often?
Do you shop at a particular store often or have to make bulk purchases for your business?
Do you prefer straight cashback?
If you are someone who frequently flies on one airline, perhaps getting one of their credit cards would be most beneficial. If you don’t fly with one airline in particular but want to get travel points you can use everywhere, consider the Chase Sapphire Reserve or Venture Card from Capital One.
If you shop at one store a lot, get one of their cards. Amazon, Target, and Nordstrom in particular have fantastic credit options that give you a percentage off and/or points towards money to spend in the store with every purchase. If you have to make bulk purchases for business, Costco is a great option because you get a credit card, Costco membership, and store credit points bundled into one, creating even more bang for your buck.
If you don’t travel often or frequent any store in particular, cashback is a safe bet. This can be deposited in either your checking or savings account and is an easy way to increase your savings. Maybe challenge yourself to put all of the cashback you get directly into your savings account!
The best way to go about choosing a card is to educate yourself. There are websites completely devoted to comparing credit cards to help you make your decision. Don’t be afraid to ask around to get information on the different options out there, and choose what works best for you. See what your friends, family, or peers use or like.
Step 2: Maintain consistency with your expenses.
A great way to maintain consistency with your expenses is to put a few of your recurring charges on autopay. I suggest picking bills like your phone, cable and/or internet, utilities, and monthly care insurance payments on autopay with your credit card.
These types of expenses often don’t fluctuate much (if at all), which makes them a great option to put on your credit card. If you consistently get the same monthly charge, you’ll know what to expect. A lot of cards now will actually notify you if a consistent monthly charge changes, which is really helpful to keep tabs on your expenses.
If you do choose to do this, just be sure to pay your card on time! Set a monthly reminder on your phone or email calendar a few days ahead of time to ensure that you always get your payments in and allow for processing times.
Step 3: Make tax season easier.
Believe it or not, using a credit card can make your tax preparation so much easier! As an entrepreneur (especially if you’re a solopreneur), it can be difficult to navigate expenses and determine what you can write off and how to pay for different things. The easiest way to separate things out is to get a credit card that you use just for business. It doesn’t necessarily have to be a business credit card, but it should be a credit card that you only use for business purchases. This way you can easily differentiate business purchases from personal purchases.
This next piece of info is what will really save you during tax season: Your annual summary. If you do a good job of only using your business credit card for business purchases, your annual card summary will make calculating your expenses way easier. Your annual summary breaks all of your expenses down by category, and depending on your credit card, will even include a list of purchases within each category. This way, at the end of the year, you can just look at your annual summary and note what you spent on medical, gas/auto, advertising, food/dining, etc.
A business-only credit card can be a huge benefit to your finances as an entrepreneur. Have a particular card you love? Share it in the comments below!
About the Author: A native San Franciscan, Michele Lando is a Certified Professional Resume Writer and founder of writestylesonline.com. She has a passion for helping others present the best version of themselves, both on paper and in person, and works to polish an individual’s application package and personal style. Aiming to help create a perfect personal branding package, Write Styles presents tips to enhance your resume, style, and boost your confidence.
This story was originally published on April 13, 2019, and has since been updated.
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