Starting up a business involves expenses. For most new entrepreneurs, a loan is a must in order to get the business started. Aside from business loans, additional support may be necessary in keeping up with the production and operating costs. Small business credit cards often provide this much-needed financial assistance to business owners.
Why Get a Business Credit Card Debt
Some people may be skeptical about obtaining credit cards for business because they are afraid that credit cards may lead to uncontrolled spending and debt. However, business credit cards can be great tools not only in keeping a steady cash flow but also in separating your business and personal finances. With the help of business credit cards, monitoring your expenses is also a lot more convenient and easy. How can you get the most from your business credit card? How can you avoid credit card debt?
Obviously, proper management and control is needed to avoid the risk of credit card debt. For instance, some entrepreneurs may be prone to charging their personal expenses on their business credit card but such a habit can easily lead to uncontrolled debt. As a business owner, you need to make sure that your business credit card is exclusively used for official business purposes.
Submitting your credit card payments on time is also crucial if you want to stay away from trouble. It could be tempting to pay only the minimum due even if you have the cash to pay your balances in full. But carrying over your balances from month to month also means paying for the additional interest charges. Thus, to avoid unnecessary costs, make it a point to completely pay off your charges each month.
Business Credit Card Debt Consolidation
But what if you’re already stuck in credit card debt? What can you do about it? A business owner has two options to solve this problem. One is by acquiring a debt consolidation loan to pay off all existing balances and stop the interest rates from accumulating further. By combining his credit card debts into a single loan, the interest rate is reduced and monthly payments are significantly lowered.
Another way is by getting a balance transfer credit card with low interest or zero interest. This would enable you to pay off all the balances you transferred at a low rate or zero interest. However, take note that the 0% APR is only applicable for a limited time, so you must take advantage of this opportunity by completely paying off all the debts you’ve transferred within the zero interest period.
Any of these two credit card consolidation options can work but in order to be effective, a business owner needs to ensure that he/she can pay bills without a single delay or miss. It would also be wise to avoid incurring new debts while still working on your repayment. Finally, once you’re done with your repayment, you need to a lot more careful about using your business credit cards to avoid falling in the same debt trap again.
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Monday, June 29, 2009
Thursday, June 18, 2009
All about Your Business Credit Score
All businesses –both large and small – all rely on good credit standing for a favorable stand with prospective lenders. By having an excellent business credit score, a business owner can be confident that he can obtain the financial assistance he needs at any time without difficulty.
But building a credit history for your company is not achieved in an instant. Time and effort is also needed in order to build a solid business credit. In this article, let’s discuss the necessary steps to establish your own corporate credit.
Ensure your business entity. The legality of your business is crucial in establishing business credit. First, you need to define the legal entity of your business. It can either be a corporation or an LLC (Limited Liability Company) to qualify for a bank loan. If your business is a sole proprietorship, you may not qualify for a business loan and it would be easier to apply for a personal loan instead.
Proof of existence. In order to be considered as a legitimate company, you need to have a physical address, a business telephone number, and a complete contact information. A website and an e-mail would not be a sufficient proof of your company’s existence since anyone can easily create a presence online. Having a physical address is what’s most important.
Obtain all necessary business permits and licenses. Make sure that you’ve secured all licenses and permits that are required for all businesses in your local state.
Register for a business tax ID number. A business that has been in operations for at least 2 years should have a complete record of financial statements and have its own tax ID number. Make sure that your tax ID number, EIN (employer ID number), and licenses are all listed in the same exact legal company name.
Establish your business savings account. Having your own business bank account is a solid proof that your business is financially stable. A balance of at least $10,000 for the past three months is considered as favorable and stable.
Establish at least 5 trade references. Build up a good business-to-business relationship with your suppliers or business partners so you can use them as references for establishing your business credit.
Register your business with a business credit bureau. Before you can start building your company’s credit history, you need to register your company with a business credit bureau like Dun & Bradstreet or Experian. D & B is a leading business credit reporting agency in the US.
Get a business credit card. After registering your company with a credit bureau, applying for a business credit card is a great way to build up your business credit. As you use your small business credit card with your expenses, you are also building up a solid credit history. Of course, maintaining an excellent credit history depends on how well you handle your credit card account. If you make it a point to stay within your credit limit and if you’re always on time with your payments, you are building a positive reputation for your business.
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But building a credit history for your company is not achieved in an instant. Time and effort is also needed in order to build a solid business credit. In this article, let’s discuss the necessary steps to establish your own corporate credit.
Ensure your business entity. The legality of your business is crucial in establishing business credit. First, you need to define the legal entity of your business. It can either be a corporation or an LLC (Limited Liability Company) to qualify for a bank loan. If your business is a sole proprietorship, you may not qualify for a business loan and it would be easier to apply for a personal loan instead.
Proof of existence. In order to be considered as a legitimate company, you need to have a physical address, a business telephone number, and a complete contact information. A website and an e-mail would not be a sufficient proof of your company’s existence since anyone can easily create a presence online. Having a physical address is what’s most important.
Obtain all necessary business permits and licenses. Make sure that you’ve secured all licenses and permits that are required for all businesses in your local state.
Register for a business tax ID number. A business that has been in operations for at least 2 years should have a complete record of financial statements and have its own tax ID number. Make sure that your tax ID number, EIN (employer ID number), and licenses are all listed in the same exact legal company name.
Establish your business savings account. Having your own business bank account is a solid proof that your business is financially stable. A balance of at least $10,000 for the past three months is considered as favorable and stable.
Establish at least 5 trade references. Build up a good business-to-business relationship with your suppliers or business partners so you can use them as references for establishing your business credit.
Register your business with a business credit bureau. Before you can start building your company’s credit history, you need to register your company with a business credit bureau like Dun & Bradstreet or Experian. D & B is a leading business credit reporting agency in the US.
Get a business credit card. After registering your company with a credit bureau, applying for a business credit card is a great way to build up your business credit. As you use your small business credit card with your expenses, you are also building up a solid credit history. Of course, maintaining an excellent credit history depends on how well you handle your credit card account. If you make it a point to stay within your credit limit and if you’re always on time with your payments, you are building a positive reputation for your business.
Credit Cards Resources
* Instant Approval Credit Cards
* Reward Credit Cards
* Free Credit Report
Wednesday, June 3, 2009
5 Important Things About Business Credit Cards
Some business owners think that getting a business credit card is unnecessary and choose to stick with their personal credit cards as a means of financing their business needs. But is there really an advantage in using a business credit card? Below are five important things a business owner must know about business credit cards.
1. Separate your personal and business finances.
At the start, one may feel that it’s okay to combine both personal and business charges using personal credit cards. But as you incur more business expenses in your personal account, you’ll see that combining the two isn’t such a good idea.
First, it makes accounting tasks more confusing and second, it makes management of your personal and business funding a lot more difficult. On the contrary, using a business credit card enables you to separate your personal account from your business account which is a great ease as your business starts to grow.
2. Business credit cards help build your business credit.
Every business owner must establish his own business credit history as early as possible. A business credit card lets you do just that. Keeping your business credit in good shape is a good preparation when the time comes that you’ll need additional help in financing or expanding your business.
3. Take advantage of special privileges.
Some privileges provided by business credit card companies are only limited to business credit card holders. These privileges include discounts, special rates, gifts, insurance, additional credit cards for employees, business reward programs and other perks that can boost your business.
In fact, credit cards with reward programs allow its holders to earn more points more quickly than personal credit card holders. This is because business expenditures are expectedly much higher than personal expenses. When you own a business, you’ll be spending the same amount of money each month whether you get a business credit card or not. So why let this opportunity pass when you can spend and earn rewards for your business expenses at the same time? Choose the best reward program that works best for your type of business. For instance, you may choose to get a credit card for business with a Cash Back Program, Frequent Traveler Rewards, Gas Rewards Program, etc.
4. Better rates.
Some people have the false notion that business credit cards always come with high interest. On the contrary, you can find business credit card deals today that are even lower than what personal credit cards offer. Don’t forget that competition between credit card companies enables consumers to choose the best deals.
5. Boost your personal credit history at the same time.
Since you haven’t yet established a business credit, when you apply for a business credit card, the bank would be granting you approval based on your personal credit history. This means, if you can keep up a clean credit in both your personal and business credit card accounts, it will be a great boost in your overall credit status.
More of Business Credit Card Articles
1. Separate your personal and business finances.
At the start, one may feel that it’s okay to combine both personal and business charges using personal credit cards. But as you incur more business expenses in your personal account, you’ll see that combining the two isn’t such a good idea.
First, it makes accounting tasks more confusing and second, it makes management of your personal and business funding a lot more difficult. On the contrary, using a business credit card enables you to separate your personal account from your business account which is a great ease as your business starts to grow.
2. Business credit cards help build your business credit.
Every business owner must establish his own business credit history as early as possible. A business credit card lets you do just that. Keeping your business credit in good shape is a good preparation when the time comes that you’ll need additional help in financing or expanding your business.
3. Take advantage of special privileges.
Some privileges provided by business credit card companies are only limited to business credit card holders. These privileges include discounts, special rates, gifts, insurance, additional credit cards for employees, business reward programs and other perks that can boost your business.
In fact, credit cards with reward programs allow its holders to earn more points more quickly than personal credit card holders. This is because business expenditures are expectedly much higher than personal expenses. When you own a business, you’ll be spending the same amount of money each month whether you get a business credit card or not. So why let this opportunity pass when you can spend and earn rewards for your business expenses at the same time? Choose the best reward program that works best for your type of business. For instance, you may choose to get a credit card for business with a Cash Back Program, Frequent Traveler Rewards, Gas Rewards Program, etc.
4. Better rates.
Some people have the false notion that business credit cards always come with high interest. On the contrary, you can find business credit card deals today that are even lower than what personal credit cards offer. Don’t forget that competition between credit card companies enables consumers to choose the best deals.
5. Boost your personal credit history at the same time.
Since you haven’t yet established a business credit, when you apply for a business credit card, the bank would be granting you approval based on your personal credit history. This means, if you can keep up a clean credit in both your personal and business credit card accounts, it will be a great boost in your overall credit status.
More of Business Credit Card Articles
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