The One Time You Need a Credit Card

Generally, credit cards bring a kind of debt that you don’t want. They come with high interest rates and are considered ‘bad debt,’ since you’re not actually investing in anything for your future when using them. However, there is one time you need a credit card, and that’s if you run a home business.
The main reason for having a credit card specifically designated for your business is to pay your business expenses with that credit card, and leave them entirely separate from your home’s expenses. Or more importantly, your home’s income. Not separating your business expenses from your home’s expenses is just bad business practice. And worse, if things don’t work out with your business, you could be in big trouble in both your business and your home life.
Let’s say you’re just starting out in your home business and you need $5,000 to get started. Fortunately, you own your home but your business has not yet generated any profit to pay start-up costs. You need to borrow. Not a big deal, lots of business owners do – but it’s how you do it that’s important. Getting a business loan could be difficult, and you may not want to go through the lengthy application process, or may not want to pay the interest rates being offered. This might be the first time you consider a credit card for your business and it certainly makes sense.
But, aren’t credit cards the evil debt that you’re trying to stay away from?
Often, people go into credit cards with this kind of mentality and while that kind of caution is generally advised when taking on credit, it’s completely different when you’re doing it for your business. The reason for this is because it’s a good option for your business; and your business’ financial needs are different from your financial needs. You need to separate the two and a business credit card is a good way to do that. Even though you may still pay a slightly higher interest rate, it’s better than taking out a second mortgage on your home in order to pay off your business expenses. In this situation, which happens more often than you’d think, if your business fails, you’re then farther in debt and your home could be in jeopardy.
By using a credit card for your home business, you’ll not only have the money you need in order to make your business successful, you’ll also be protecting your home. And business credit cards might not be as costly as you think. Shop around and find a card that’s dedicated to businesses and gives lower interest rates as well as other perks (such as frequent flyer miles if your business requires you to travel,) to really get the best deal.
One more advantage of having a credit card business? You’ll have all your expenses and their costs laid out right there for you come tax time when it’s time to start crunching numbers and finding out what you spent on your business expenses, as many of these can be deducted. Instead of sorting out your receipts for those new decor items from those for your new computer equipment, just pull out your credit card statements and that’s your expense account – all tied up in a neat little package for you.