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
Posted: April 7th, 2008 under Notes.
Comments: 14
Comments
Comment from Gus Direct
Time: April 11, 2008, 6:21 pm
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?
Comment from Make Money Online - Trent Brownrigg
Time: April 15, 2008, 8:35 pm
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.
Comment from No / Low Calorie Drinks
Time: April 17, 2008, 10:37 pm
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.
Comment from Rick
Time: April 18, 2008, 4:29 pm
Sound advice for sure, keeping personal and busines finances separate is a must. The basics of business.
Comment from Takeoffzone
Time: April 18, 2008, 8:12 pm
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.
Comment from Official Football credit Card
Time: April 21, 2008, 1:03 am
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.
Comment from Porch Lifts
Time: April 23, 2008, 9:12 pm
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.
Comment from Tenoch
Time: April 25, 2008, 9:21 pm
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…
Comment from Experts on Credit
Time: May 5, 2008, 6:50 pm
Your absolutely right about keeping business accounts separate from personal finances and your other businesses. This is the only way to keep track of spending.
Comment from work at home dad
Time: May 8, 2008, 2:10 pm
I’m sorry but in my opinion, any credit card is just a headache waiting to happen. Most people, myself included, don’t have the discipline to use a credit card wisely, especially with those high rates.
Comment from zohai
Time: May 22, 2008, 5:41 am
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
Comment from Myfinancebutler
Time: June 2, 2008, 9:17 pm
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.
Comment from Rob - Credit Card Debt Law
Time: June 14, 2008, 3:41 am
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.
Comment from Brian - blog.financegourmet.com
Time: July 18, 2008, 6:10 am
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.
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