The procedures for establishing credit cards in a business name are important for any entrepreneur to understand and follow. You will have to incorporate or form a limited liability corporation (LLC) to successfully implement the steps. Company credit cards can be used to advantage for a business. You can use them as a line of credit, which you can use to purchase inventory and pay for later. Some business owners use credit card statements to supplement their bookkeeping system.
- Finding the right credit cards for your company means sorting through numerous offers targeted toward business owners. Evaluate the various features and benefits of each card. Only then can you make an informed decision on which card, or cards, work best for your organization. Other factors you'll need to consider: payment terms, reward programs and interest rate.
For example, some cards do not have a credit limit; however, the cards require you to pay the balance in full each month. Other cards may have credit limits, but allow you to choose whether to pay off the balance each month or make monthly payments over time. You should also take into account reward programs and which ones benefit your company the most. If your business involves use of a vehicle, take a closer look at the advantages of certain gas credit cards over others.
If air travel is a big part of your operations, there are credit cards that offer frequent-flier miles you might c onsider. You will also need to determine the maximum interest rate acceptable to you, and when any introductory rates might expire. - Once you find offers that meet your criteria, you'll need to gather applications from the local bank, credit union or major credit card companies. Many credit card companies allow you to submit applications online. The application process can be lengthy; however, it is important that you fill them out as completely and accurately as possible.
You'll probably need to enter your business name, business street address, business phone number, date the business was established, revenue and bank accounts. Usually, you will also be required to furnish the personal information of the business owner, including home address, Social Security number, and household income and banking information. - The importance of establishing credit cards in a business name should not be underestimated. They are an excellent way of tracking your business spending, and monitoring the monthly reports to analyze where your resources are going. This will help you develop better and more efficient ways to use the credit cards to expand your business. Once you build a good credit history you'll be able to increase your borrowing capacity and obtain credit with equipment vendors and inventory suppliers. You may also be better prepared to apply for a small-business loan.
- You'll need to think about the credit limit when you're looking to establish credit cards in a business name. Cards that are flexible and will allow you to raise the credit as your business need dictates are more desirable. The rules that apply to your personal credit cards are the same for business credit cards. If your cash flow permits, get into the habit of paying off the balances on your credit cards each month.
At the very least, make sure you make your payments on time. Nothing wears away at cash faster than late fees and over-the-limit charges. It is also important that the companies that issue your credit cards report to the major credit bureaus. Once you've established a history of timely payments, you can request limit increases to keep up with the growth of your business. - Credit cards in a business name have advantages over ordinary credit cards. Often, the cards have low ongoing rates on purchases, special savings and reward programs. Typically, business credit cards have more generous limits and are a great way to track and monitor your business expenses. Some credit card companies permit you to track your business expenditures down to specific groupings, such as entertainment, lodging or car rentals. This information can be used to analyze the use of company resources and in what areas to modify company policy.
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