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.
How to Save for Retirement without a 401(k)
401(k) plans make saving for retirement a lot easier and more convenient. The money is automatically set aside from your paycheck before you’re tempted to spend it. You also benefit from an immediate tax break. Your employer may even match your contributions if you’re lucky. But what if you’re not so lucky and don’t have a 401(k) plan?
The good news is that saving for retirement without a 401(k) plan is still possible. You’ll just have to put in a little more effort. But if you’re willing to put in that effort, it will pay off in spades by helping you save toward a comfortable retirement.
In this article we’re going to look at how someone can save for retirement without a 401(k) plan. We’ll look at what other savings options are available, pros and cons, what to look for and more.
Here are some other ways to save for retirement if you don’t have a 401(k) plan.
IRA
If you don’t have a 401(k) plan, your next best alternative is an IRA. IRAs come in two varieties: a traditional IRA and a Roth IRA. Both accounts work in similar ways with the main difference regarding how they’re taxed.
When you contribute to a traditional IRA, your contributions are tax-deductible up front.
Your money is able to grow tax-free until you’re ready to start making withdrawals in retirement. It’s at that point that you will finally pay income tax. Roth IRAs are the complete opposite: you’re taxed on the contributions you make up front, but you aren’t required to pay tax on any withdrawals you make in retirement.
Another key difference is the amount you can contribute to both. For traditional IRAs, you can contribute up to $6,000 annually ($7,000 if you’re at least 50 years old). With Roth IRAs, the amount you can contribute depends on your annual income. If you have a high household income, you may not even be eligible to contribute to a Roth IRA.
One of the main benefits of 401(k) plans is the ability to set up direct deposit with your employer. The good news is that there’s nothing stopping you from doing the same with IRAs.
If your employer doesn’t allow you to automatically contribute to an IRA from your paycheck, you can set it up so that you automatically contribute to your IRA from your checking account a day or two after your paycheck is deposited into your bank account.
If you’re having trouble funding your IRA, you can contribute some or all of your tax refund from the IRS to your IRA. That’s right, by completing a tax form with the government your tax refund could be automatically deposited directly into your IRA, helping you reach your retirement savings goal sooner.
Other Saving Options
If the IRA isn’t your cup of tea, here are a couple other savings options that are available.
Saving Accounts
Everyone needs emergency savings. If you’d like to earmark money toward retirement, but you’re afraid you might need it again soon, you might consider putting it in a savings account.
A savings account is a lot more accessible than an IRA. You can withdraw the money whenever you need it, but this can be a double-edged sword. You could find that you’re constantly using the money that you’re supposed to be saving for retirement for other purposes. To avoid a situation like this, it’s best to only keep a minimum amount of funds in your savings account.
Certificates of Deposit
Another savings option worth considering is certificates of deposit (CDs). CDs are a lot like savings account in the sense that they offer a similar interest rate and the government insures them. The main difference is that your money is locked-in for a specific period.
CDs may be as short as three months or as long as 10 years. If you’re saving for retirement, it’s probably a good idea to go with a longer-term CD, but at least you have the option of choosing a CD with the term that fits you best.
How Much Should I Save to Reach My Retirement Goals?
That’s a great question and it really all depends on when you’re planning to retire. All things considered equal, the sooner you start saving for retirement, the less money you’ll need to save. Similarly, the sooner you plan to retire, the more aggressively you’ll need to save. Unfortunately, there’s no magic number for everyone. Fortunately, doing the math isn’t too tough.
Start by figuring out when your ideal retirement date is. Once you have a goal in terms of when you’d like to retire, figure out the lifestyle you’d like in retirement. For example, are you okay with playing bridge on your front porch or do you want to go on cruises and travel the world?
Once you have your dream retirement in mind, try to put a price tag on it. Figure out how much you expect to spend in retirement. It can help to create a mock budget. Once you have your mock budget in hand, you can figure out how much you’d need to save from each paycheck in order to achieve your desired retirement date. It’s that easy.
Saving within Your Means
How much you need to save depends on the lifestyle you want for when you’re retired. If you plan to travel down south to Florida during the winter and travel to exotic locations during the summer, chances are your retirement is going to be pretty pricey.
It’s a good idea to ask yourself if you can truly afford a lifestyle like that in retirement because this will dictate how much you need to save during your working years.
A good rule of thumb is to aim to save between 10 and 15% of your paycheck beginning in your 20s. If you start saving later in life, you’ll probably want to up the percentage of your savings depending on the lifestyle you want to live in retirement.
If you’re finding your expenses are going to be too high once you’re retired, you might consider downsizing your home or scaling back your retirement plans. By doing that, you won’t need to save as much during your working years.