Business Credit Cards - What You Should Know on Their Possible Disadvantages by FrankH22

VIEWS: 2 PAGES: 2

									Business Credit Cards: What You Should Know on Their Possible Disadvantages


Having the assistance of a credit card as you are starting on a new business venture may not be absolutely
necessary, but it can surely help you a lot. It does not only give you a source for funds, but it also adds
organization to your cash flow and in tracking expenses. Aside from this, most business credit cards offer
many perks that can be of great benefit to your business.


But as tempting as these company credit cards may sound, remember that the common error of a lot of
business owners is that they do not consider the disadvantages that these credit cards may include. Many
have made huge mistakes in running their finances with such business credits that have often led to
personal-liability. This is why you need to know about the disadvantages and learn what you can do to either
handle or prevent them from ruining your business.


What are the Drawbacks of Business Credit Cards?


What a lot of small business owners do not realize is that when they are only initially starting out on a
business and have not yet established a business credit score, their professional and personal finances can be
blended. This is because most credit cards require a personal liability agreement from the business owner at
least for the first few years when company is just starting out.


Therefore, the business owner can be held liable for any problems with the company’s credit account. For
example, if your company fails to make payments on time then this could significantly dent your personal
credit score despite the fact that this is not a personal transaction.


Other possible disadvantages that business credits may have include the large possibility for employees to
abuse the use of company credits by charging personal purchases. Aside from this, fewer protections may
come with it as compared to a personal credit card because the intended use of these credits are for company
purposes and not personal. Higher interest rates are also usually charged by business credit cards as
compared to personal credit cards.


What You Can Do To Control Mismanagement of Business Credits?


Despite the possible disadvantages that credit cards may bring, remember that these things can only happen
if there is a mismanagement of your credit account. What you can do is set certain precautions so as to avoid
such drawbacks from happening. Remember to register your company with a business credit bureau as they
can help you establish a business credit score, which will later on help you forgo with the personal-liability
agreement.


Also remember to manage your company’s financial transactions well. Build a favorable credit history by
making the right payments and avoid making huge debts that your business cannot afford. More importantly,
when you’re only starting out, remember that it cannot be avoided for you to be personally liable to debts
therefore learn to use credits wisely. It would also be helpful to take extra precautions by placing minimal
credit limits for employees and reporting abuse of your company’s credit account.


Remember that business credit cards can help your company a lot, but they are not flawless and therefore
one has to be smart in using them. Remember to take the extra precautions and always be careful with your
finances.


Through this, when you avail a credit card for your company, you can make it work for you and allow it to
become a partner in making your business grow instead of giving you liabilities.


credit score scale

								
To top