Businesses need to follow strict rules for making purchases by using the company’s funds, as misuse may lead to extra burdens from tax audits from the IRS. So, you must be careful about how and where you spend your business money. No matter how small or big your business extends, you must keep your business expenses separate from your expenses. So how do you use a business credit card to keep track of your business expenses and maintain a clean financial record with a 5-star processing credit card? Read on to find out:
Why use a 5-star processing credit card?
With the rise of technology and globalization, now small businesses can easily create their recent versions of virtual or prepaid business credit cards to manage everyday expenditures more efficiently day by day. Here are the reasons why a business credit card is a vital financial resource for your business:
- The most obvious reason is that it can help you separate your personal and business expenses, which in turn can make tax time a lot easier, allowing you to track your business expenses separate from personal expenses easily. It eases your bookkeeping task as you can easily list your business expenses and track each penny invested to the dot.
- A business credit card can also help you build a credible credit history with the issuing bank, so you have a good credit profile for better future borrowing terms. That can be helpful if you need to apply for a commercial loan or if you want to improve your credit standing so that future loans may be easier to obtain.
- Business cards also allow you to earn points that can amount up quickly and allow you to take advantage of certain perks such as airline free miles, hotel discounts, car rentals, cash back rebates on your business expenses.
How does a business credit card work?
When you are looking for a business credit card, there are a few things that you should keep in mind:
- First, ensure that the card has a low-interest rate. You don’t want to be paying a lot of money in interest each month. Also, make sure that the card has a high limit. It will allow you to make larger purchases without worrying about reaching your credit limit.
- Before accepting credit cards, make sure that you know what fees are associated with them. These could include an annual fee, transaction fee, or foreign transaction fee. Make sure to read the terms and conditions of your credit card agreement carefully. That will help you understand the responsibilities of using a business credit card.
- When approved for a business credit card, the issuer will send you a card that features your company’s name and logo. You can use it to make purchases for your business and use it to get cash advances.
- You should use your business credit card responsibly: make sure that you only use it for business expenses and always pay your bills on time. If you misuse your business credit card, it could damage your company’s credit score.
How to use a 5-star Business Credit Card?
Businesses can use business credit cards to purchase goods and services, pay bills, and manage everyday expenses, such as office supplies or gas. They are very similar to personal credit cards but have higher levels of security. So ensure you are extra careful when spending with your business credit card as well. It will help you keep track of your spending and ensure that you are only using the credit card for business purposes.
- You must keep track of your spending by tracking your expenses in a budgeting tool or spreadsheet. If you do not have a business checking account, open one and run all your purchases through this account. It will help you be on top of your budget and ensure that you can pay your credit card bill on time. It will help you keep better track of what you spend on business-related expenses.
- Make sure to pay your bills on time. Many credit card issuers will charge you a late payment fee if you miss the due date on your bill. If this happens consistently, it will lower your business credit score. Timely payments on your credit card bill will help you maintain a good credit score and avoid late payment fees.
- Please make a list of your debts and their interest rates. It will help you determine where to focus your debt repayment efforts and decide which debts to pay off first. High-interest debt should be your top priority when it comes to paying off credit card debt. Calculate how many months it will take to pay off a credit card balance if you make only the minimum monthly payment – the information is on your bill. This way, you can plan your finances accordingly and put together a budget that allows you to pay down the debt faster.
- Make sure your balance does not exceed 50% of your credit limit. It will help you maintain a good credit score and keep your interest rates low. Balance out your expenses by planning for times when your business cash flow will be low. Have a plan in place for paying off all credit card charges and other outstanding balances each month so that you do not accrue interest charges on any excess amounts. This way, you can keep your overall costs down without sacrificing your credit score by carrying a monthly balance.
- Make sure that the card offers rewards. It could include cashback, points, or miles. These rewards can help offset the costs of using the card. You can also use the rewards points that come with this credit card to buy things like gift cards, electronics, and more and save money on things you would typically purchase. You may rack up rewards points for future purchases with the different rewards programs out there, so be sure to find one that best suits your needs. For instance, if you tend to travel a lot, you may want a credit card with a rewards program that gives you airline miles or hotel stays.
- Most importantly: Check your credit report at least once a year to ensure that there are no errors on your account. That can help you catch errors and find ways to reduce your debt load.
Conclusion
Using your 5-star processing business credit card will help keep the stress off of your expenses and increase the accuracy of your business expenditure track. Even if you have a small business, you must apply and get yourself a business credit card which is a must for large-scale businesses. You now know how to use your business credit card for maximum benefits and proper use.
