As anyone who has ever tried to open their own small business knows, securing the right kind of financing, both start up and ongoing, can be the difference between an endeavor that becomes and stays successful and one that never gets off the ground. Oftentimes, start up funding is achieved by seeking bank loans or funding from venture capitalists.
However, once that initial funding has dried up, it is important to be able to rely on small business credit cards to get you and your company through lean times or to help you make large capital purchases when the need arises. Besides providing timely infusions of purchasing power, business credit cards have numerous other benefits that entrepreneurs can use to their advantage.
One of the key advantages of using business credit cards to make corporate related purchases is that the monthly statements issued make it easy to track and itemize expenses that need to be accounted for at tax time.
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The old method of keeping the stereotypical shoebox full of receipts is not a method that any serious business owner should consider using. Before signing up for your first card, you should check to see whether the offers that you are considering provide an end of the year purchase summary. This one piece of paper (or, if you administer your account online, this one web page) can make the act of itemizing deductions a piece of cake.
Another great advantage that business credit cards have is that they make it much easier to keep business and personal purchases separate. When business owners use their own accounts for making business purchases, it becomes much more difficult to sort out what was purchased for the business and what was purchased for the company when tax time comes. This will be particularly crucial should your company raise the attention of the IRS and be forced to undergo an audit.
Having corporate and personal purchases documented in entirely separate accounts will help the owner convince the IRS that those items that were deducted were in fact bona fide business expense items. Every small business owner should consider using separate cards. Business credit cards not only help with capital expenditures, they also provide a handy paper trail that can be highly useful at tax time.