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.
Beyond the Purchase Price
When purchasing a real estate property in Canada, it's essential to consider not only the listing price but also the hidden closing costs that can significantly impact your budget. Beyond the down payment and mortgage loan, there are several additional expenses that homebuyers often overlook. In this article, we will discuss ten hidden closing costs Canadian buyers should be aware of, and we will briefly discuss some mortgage loan options to help you navigate the home-buying process more effectively.
Hidden Closing Costs
Here are ten hidden costs to consider when buying a real estate property.
1. Closing Costs
Closing costs encompass various fees associated with the finalization of the real estate transaction. These costs typically include legal fees and administrative fees. It's crucial to consult with a real estate lawyer who specializes in property transactions to ensure all the necessary legal processes are completed smoothly.
2. Home Inspection Costs
Before finalizing the purchase, a professional home inspection is highly recommended. The inspection assesses the property's condition and identifies any potential issues or repairs required. While the cost of a home inspection varies, it is essential to allocate funds for this crucial step to avoid surprises and make informed decisions.
3. Property Taxes
Property taxes are an ongoing expense for homeowners. These taxes contribute to local government services, infrastructure and amenities. Before buying a property, research the area's property tax rates and calculate the approximate annual cost. Property taxes can vary significantly depending on the location and assessed value of the property.
4. Homeowners Association (HOA) Fees
If you are considering purchasing a property within a condominium or planned community, there may be homeowners association fees to consider. These fees contribute to the maintenance, repair and upkeep of shared amenities and common areas. Understand the HOA fees and their frequency, as they can vary from one development to another.
5. Insurance Premiums
Protecting your investment is crucial, which is why insurance premiums should be factored into your budget. Home insurance covers damages and losses due to fire, theft, natural disasters and liability claims. It's recommended to obtain multiple insurance quotes and consult with insurance providers to ensure you have adequate coverage at a reasonable cost.
6. Maintenance and Repairs
As a homeowner, you are responsible for ongoing maintenance and repairs. From routine maintenance tasks like lawn care to unexpected repairs such as plumbing issues or HVAC system breakdowns, budgeting for these expenses is essential. It's advisable to set aside a percentage of your monthly budget for home maintenance and create an emergency fund for unexpected repairs.
7. Utilities
Utilities, including electricity, water, gas and potentially other services like internet and cable, are recurring expenses that homeowners must consider. The costs can vary depending on the property size, location and usage patterns. Contact utility providers to estimate the monthly costs associated with the property you are considering.
8. Moving Expenses
Moving costs can quickly add up, especially if you are relocating within a significant distance or have large amounts of furniture and belongings. Expenses may include hiring professional movers, renting a moving truck, packing supplies and temporary storage. Obtain quotes from different moving companies and plan your budget accordingly.
9. Home Renovations and Customization
If you plan to renovate or customize your new home, allocate funds for these projects. Whether it's updating the kitchen, remodeling bathrooms or adding personal touches to make the property truly yours, these expenses can add up quickly. Consider obtaining multiple quotes from contractors and factor in additional costs such as permits and materials.
10. Land Transfer Tax (LTT)
In Canada, land transfer tax (LTT) is a tax levied by the provincial government when a property is transferred from one owner to another. The land transfer tax payable amount varies depending on the province in which the property is located, and whether the owners are first-time home buyers. LTT is typically calculated based on the purchase price or the fair market value of the property, whichever is higher. The tax is payable by the buyer and is due upon closing the real estate transaction.
Mortgage Loan Options
In Canada, potential homebuyers have several mortgage loan options to choose from based on their financial situation and preferences. Here are two popular options.
Fixed-Rate Mortgage
A fixed-rate mortgage offers a stable interest rate for a specific period, typically ranging from one to ten years. This allows you to have consistent mortgage payments throughout the term, providing predictability and security.
Variable-Rate Mortgage
With a variable-rate mortgage, the interest rate fluctuates based on market conditions. The interest rate is usually lower than that of a fixed-rate mortgage, but it can change over time, impacting your monthly mortgage payments.
Final Notes
When purchasing a real estate property in Canada, it's crucial to consider the hidden closing costs beyond the listing price. By accounting for these costs, you can avoid financial surprises, and ensure a smoother home-buying experience. Additionally, explore various mortgage loan options to find the one that best suits your financial situation and long-term goals. Being prepared and well-informed will help you make confident decisions and enjoy your new home with peace of mind.