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Advantages and Disadvantages of Small Business Credit Cards

Small business credit cards isn’t something most of us have ever paid much attention to. However, with the shaky economy and the difficulty of landing jobs many people are starting their own home businesses. In order to keep track of business expenses, small business owners are using credit cards as a way to keep track of their spending. There are both advantages and disadvantages to having that small business credit card. Here are some of the advantages and disadvantages you will need to consider.

Advantages of Credit Cards For The Small Business

There are three main advantages for small businesses to use a credit card and all have to do with being able to better control expenditures.

1. Using a credit card makes it easier to manage business checking accounts. Instead of writing dozens of checks each month for supplies, phone, electricity, insurance and all those different expenditures your business has you can bunch many of those checks together by using your credit card and then pay them all off with one check to the credit card company.

2. Using a credit card makes for easier bookkeeping. By using a credit card to pay for all or almost all your business expenditures, it will be easier to complete your bookkeeping. Instead of adding up the totals from those various checks and having to keep track of all of them in order for your bookkeeping to balance out, you can simply use your credit card statements. Whether you do your bookkeeping on a monthly or quarterly basis, you’ll have less papers to shift through and a clear statement of all your expenses.

3. Having a credit card helps you keep track of what is being spent where. This means you will know at a glance if you are spending too much in one area of your business and can find ways to reduce that spending and cut waste so that you have more money for the business necessities and hopefully, to put towards your business profit.

Disadvantages of Having a Credit Card For A Small Business

The one disadvantage to having small business credit cards is that unless your business is incorporated you may be able to be held personally liable for any credit card debt that your business incurs. Such liability could put you in debt and ruin your own personal credit as well as that of your business.

When used wisely small business credit cards can help your business succeed but, there are risks to having one.

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