Home Business Credit Card
Why bother with a home business credit card ? Well…..from a tax and accounting perspective it is important to separate your personal income from your business income.
This also applies if you have multiple businesses. Keep a separate set of accounts for each business.
Once you have separate accounts setup, accounting for all the revenue and costs for your businesses becomes a whole lot easier.
The same applies to your credit card (or cards). Don’t make the mistake of putting your business expenses on a your personal credit card.
Having a separate credit card is handy for any home based internet business. Most of the products for sale online today require a credit card for payment. This especially applies if your advertising with the larger PPC programs link Adwords.
We run three separate accounts for our online home business:
- An ordinary savings account where Adsense earnings are deposited, along with cheques for affiliate earnings.
- Our Paypal account where earnings from suppliers prepared to deposit into Paypal are accepted, and where we pay as many of our costs as possible (Being based in New Zealand it helps minimise exchange rate fees).
- The final account is a separate credit card account. This pays the Adwords bills and covers for times when Paypal is not accepted. All debits on this account are paid within 30 days of the cost being incurred. This ensures that no interest is paid on purchases.
In choosing a credit card for this purpose there are a couple of things to take into consideration:
- Since you pay off the credit card each month, the interest rate is of little importance.
- Find a card with low fees or no annual fee. By being careful with your credit card selection you can hold your costs for the card to an absolute minimum
For more information:
- No Annual Fee Credit Cards
- Lowest APR Credit Cards – if you don’t intend to pay off your expenses each month
Filed under: Notes
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My question regarding a business credit card for a home based business: is it acceptable to purchase items for you home that are not related to the business with the card, or is that a form of embezzling?
This is very good advice. For the first few years of my home business I didn’t separate any accounts and I still regret it to this day. It’s definitely better to keep your business and personal finances apart.
I just stumbled in here, but that is excellent advice. My businesses are reeeaally small, but I’ve started keeping their expenses on a separate card than my personal charges. It will help me a ton if I start to take off.
Sound advice for sure, keeping personal and busines finances separate is a must. The basics of business.
If you own a business, you must keep record of every income and expense involved in the operation of your business since the first day of the new fiscal year until the last one. It is here where a dedicated credit card for exclusive use of your home business expenses makes sense, this will definitely keep your business transactions separated from your personal ones and will make your life easier. – Javier.
Very true. Specially when you dont have an account and your doing your own accounts for a small business like my self. Makes life a lot easier.
I think your right about setting up different accounts for each business. It might be a little more initial work, but in the long run and probably the short run, it will pay off.
interesting point regarding having separate credit cards for your personal and business income, and of course different accounts for multiple businesses… it saves you time on managing and sorting out your finances… it takes away a lot of confusion that might com along with having only one card to all transactions may it be personal or business…
No one asks you to use credit card unwisely. See.. As long as you pay within the time limit of 0% interest then you’re good. Just make sure that you spend wisely. By using credit card, you can delay the payment = more time money in your bank thus extra interest in your account and some credit card give reward points + other interesting offers with other companies. So, credit card is gooood~ =D
This is a great idea. It was recently suggested to me by a friend — and I can see how beneficial it is how to have a separate bank account for your business earnings. I also have a paypal account and the paypal visa card, and it comes in handy when I have online transactions. Bookmarked your post! Thanks.
Great advice. I can’t stress enough the benefits of having separate accounts and credit cards for accounting purposes. It makes financial sense too. If you don’t keep good track of your expenses, how can you tell whether you are making enough money to compensate you for your effort. Zohai’s point above is also quite valuable – so long as you pay off the balance monthly.
Having a business credit card helps you if you ever need a line of credit too. There is no credit score for business’ so instead you’ll have to show the bank some proof of your business paying its bills. A few years worth of on-time business accounts go a long way toward establishing this.
If you even have a small business, it is wise to get a business credit card. This will not only look good on your credit report, but will help you when tax time comes.
Hello, I work on home bases. I use for my home business my debit cart and I haven`t got any problem with it. My cart is Visa electron and every sites accept it. So i think for this work one debit cart will be great for everyone without taxes to bank like CC.
Very useful information indeed, and tips are realistic and very practical. But, You should be careful about getting a business credit card. If you obtain the wrong one, it may end up doing more harm to you than good in that you pay for a lot higher in your supplies because of the interest rate.
I just recently started my own business and was surprised at the kind of cards I could get. At least for me, the interest rates were pretty low and the bonuses were pretty awesome.
Great post. I just started both a home based and an outside the home business. One great thing about home businesses is that you can deduct a lot of your normal expenses as business expenses when it comes tax time (just make sure they are relatively closely related). Keep up the great work.
Great Advice! The baseline for home based business owners is that they need to look for ways to separate their business even though it is done in the home. This won’t be possible without the use of a business credit card. There are many business credit card offers making a buzz and its hard sorting through the offers without a good take on what to look for. Guess it would be better to make an appointment with a business consultant or worth a chat with a business savvy bud of yours.