Credit Mistakes That Could Harm Your Small Business

Now that you’ve started your own business, or are currently in the works of opening one, looking over your company finances might be something you’re accustomed to. For some business owners the most important financial factors are that you’re making enough to keep your doors open, employees paid, and personal finances in control.

Some business owners fail to realize that if you’re using credit cards to help alleviate business costs, certain mistakes could be harmful to your business.

Using one card seems like the best idea, but are you using the right card? There are many small business credit cards available, do your research before you apply. Maybe you went with a current lender because you already had a credit card with them, or perhaps you were enticed by a commercial for a small business card, but did you look at the positives and negatives? In some cases using a personal credit card might even be a better choice than a small business card.

While you’re researching cards be sure to look for any benefits and rewards that might come with the card. Some cards may use a point system for rewards like gift cards, flier miles, or even cash. Rewards are great, but if the interest rate is too high and the card just doesn’t seem like the right choice then skip it.

If you’re using more than one card consider breaking the cards up into categories. For example, one card may be for business related bills such as electricity, water, or internet services. Another card may only be used for emergency purchases. Using different cards can help your organize your spending and potentially help your credit as long as you are keeping up with your payments.

Whether you own a small business or not, checking your credit report is always important. Getting your credit in good standing can help you if you need to find a credit card with a lower interest rate, need a small business loan, or are in need of a start-up business loan. Checking your credit report may also help against fraud and identity theft. Don’t stop your small business from reaching its potential because of your bad credit.

The Takeaway

Small business owners might realize that using a credit card for your business comes with the same consequences as using one personally. According to a study from the Ewing Marion Kauffman Foundation every $1,000 in credit card debt a small business takes on, its chances of long-term survival drop by more than 2 percent. Find and use your credit cards wisely. AmOne can help you with your business needs whether it is a small business loan, or checking your credit report. Contact AmOne’s educated Money Coaches today to see what options might be right for you and your small business.