Should you get a business credit card?
My crafty business was a hobby for a long time before I really started to take it seriously and think of it as a legitimate business. But I came to a point where I realized I had to start separating out all the finances for my business from everything else that was personal. Doing that has made my life so much easier.
I started by talking to my banker about the different options for business accounts. I ended up deciding to get a debit card for day-to-day purchases and to use as a deposit account for any money I make at craft shows or online. That was matched up with a savings account where I transfer money to save for tax payments. Then I also opted to get a credit card to use for big purchases and travel. I hesitated at first — I really did not want another credit card. But this one has a travel rewards benefit, meaning that I rack up points for using the card, and double the points when I use it to buy plane tickets or hotel bills. Then I can redeem those points for free plane tickets or other rewards in the future. (I just got my first free $400 plane ticket!)
When you are doing the accounting for your business, you want to separate out travel expenses anyway, so this is a good way to do that and get rewards. The debit/credit combo has worked great for me. But you will have to talk to your banker about what’s best for your business.
And most importantly… read the fine print.
• If the interest rate on the card is too high, you may end up paying more in fees than you gain in rewards.
• If you will rarely use the credit card, you won’t rack up very many rewards points anyway. So your best bet is to look for a card with a super low interest rate.
• If the travel rewards have a bunch of blackout dates, you may not get to redeem them for any useful tickets. Check on this before you commit.
• If the card has a high yearly fee just to own it, it may not be worth getting. Mine is fairly low and can be paid with rewards points, thankfully.
• If you have a tough time being self-disciplined about credit cards, it may be best to just stick with a debit card. I’ve found that having the credit is useful when I need to restock wholesale supplies during a slow time. When things pick up again I can pay it back down.
Despite my nerves about making the commitment to separate business accounts, I am so glad I did it. The idea of making things official, having checks with your business name on them, being able to mange your accounting with authority — it feels really good. You are in charge of your money and you’re being responsible for how you spend and save it. If you are going to spend all that money on supplies anyway, you might as well be getting some reward for it. So shop around for the best deal.