Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article, we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. [youmaylike] As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue. Number of employees. Length of time in business. Estimated monthly expenses. If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision on the business credit card you choose will have larger ramifications than your choice of a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.
From Regular Appointments to Unexpected Illnesses
Health insurance is one of the most talked-about topics in American politics, and for good reason — it is essential to one's health and financial well-being.
What Is Health Insurance and Why Do You Need It?
In America, it is important to pay attention to the costs of different medical services. These are the average costs of routine medical care procedures:
- A 10-minute doctor visit is $68
- An eye examination is $234
- An emergency room visit is $1,233
- An ambulance ride can range from $25 to $1,200
Fortunately, with the right coverage, you don’t have to pay the full amount of these medical bills out of pocket. This is where health insurance comes in handy.
Insurance is an arrangement created to spread the risk of potential costs over a larger pool of people. For health insurance, the costs include paying for the medical services required for everything from routine preventive care to major illnesses.
The organizations that manage and administer this risk include government agencies, private businesses and not-of-profit entities. These organizations will calculate the financial value of the risk and charge monthly premiums or payroll tax to their participants.
In return, participants will get peace of mind that in the event of a medical emergency they will not be responsible for paying all the expenses by themselves at once.
Different Aspects of Health Insurance
Health insurance can be an overwhelming topic due to the different types of health insurance available. In order to determine which health insurance is right for you, there are a few factors to consider:
- Your desired monthly premium
- Your deductible
- Your amount of copay and coinsurance responsibilities
- Your access to different health care providers and services
The Monthly Cost of Health Insurance
In order to finance the cost of hundreds of thousands of people's medical expenses, the administrators of health insurance charge a monthly fee, called a premium, for their coverage.
Health insurance monthly premiums will vary based on your location, age, preexisting conditions and income. You can compare different health insurance plans and their premiums using healthcare.gov.
Without any governmental support, Americans spend an average of $500 a month on health care monthly premiums. As mentioned, insurance plans can vary based on the state. California residents pay an average of $435 per month, while those residing in Wyoming pay an average of $865 per month.
Paying a Deductible
When choosing a health coverage option, you will need to pay attention to the deductible. This is the amount you are required to pay out of pocket before your health insurance will pick up the bill.
For example, a $1,000 deductible plan means you have to pay the first $1,000 of your medical expenses yourself before your insurance company will provide financial assistance. Typically, a lower deductible plan will result in higher monthly premium costs. You will need to calculate what is better for your budget: spreading out the costs monthly or paying more upfront at one time.
Health care plans can differ in how the deductible is managed. For example:
- Preventive services (e.g. routine checkups) may be covered fully by your insurance provider even before you've paid your full deductible
- Different services, such as prescription medicine and surgeries, may have different deductible levels
- Family health care plans tend to have both individual deductibles, which apply to each family member, along with a combined family deductible amount
Copayment and Coinsurance Expenses
In addition to paying a monthly health insurance premium and agreeing to an annual deductible, you may also need to copay or coinsure for each medical visit you have.
Copayments are predetermined, flat fee amounts you will need to pay yourself for every medical service. For example, every time you visit your doctor, you may be required to pay a $20 copayment fee. This is an out of pocket expense and is not normally counted toward your annual deductible.
Coinsurance is a predetermined percentage of your health care expenses that you agree to pay. An 80/20 insurance plan simply means that after you have paid your deductible and copayment, the bill is further split between your insurance company and you. 80% of the bill should be paid by them, while you are responsible for the other 20%.
Types of Health Insurance Plans
There are many different types of health insurance plans, with the most common being:
Managed Care Plans
More affordable plans that outline the specific health care providers you can use. These plans can range in the flexibility of choosing your health care provider.
- Health Maintenance Organizations (HMO): Limited number of health care providers, usually no insurance claims required.
- Preferred Provider Plans (PPOs): More flexibility to choose health care providers, however higher costs and more paperwork required when choosing an "out-of-network" provider
Fee-for-Service Plans
Least restrictive plan in terms of choosing a health care provider. It allows you to choose the doctor or hospital of your choice; however, this also means you will be required to file insurance claims after the fact.
Health Savings Account
A tax savings benefit that allows you to use tax-free earnings on qualified medical expenses.
Catastrophic Coverage
Plans that only cover serious illnesses or injuries.
Supplemental Plans
Plans that cover specific cases, such as a hospital indemnity policy that pays a fixed amount per day that you are hospitalized. These are typically used to cover expenses that your normal health care insurance plan does not.
Buying Health Insurance Outside of Work
Most Americans are covered by employer-provided health insurance plans. However, there are options outside of work to get insured.
State Health Insurance
For lower-income Americans, Medicaid is a health insurance program offering free to low-cost plans. Each state has different income thresholds, so you will need to check with your state to see if you can qualify.
Private Health Insurance
For those with a higher income or desiring additional health care benefits, there are a number of private health insurance companies.
The Marketplace, available at HealthCare.gov, is operated by both the federal and state governments and helps Americans find affordable health care options from private insurance company providers. Shopping through the Marketplace can help you identify additional health care related tax credits and savings.