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 Balance a Checkbook
People spend money every day, and it can be hard to keep track of. Debit cards, credit cards, automatic bill payments, and yes, even old-fashioned paper checks can add up throughout the month.
Balancing a checkbook today is a bit different than it was before we had access to online budgeting apps and could access up-to-the-minute information about our account balances 24/7.
It's still crucial to understand where every one of your hard-earned dollars goes, and balancing your checkbook, or reconciling your accounts, is an important part of keeping your finances organized.
4 Steps to Balance Your Checkbook
If you want to balance your checkbook the old-school way, here's how to get it done:
1. Record Your Transactions
Remember your grandmother's tiny transaction register attached to her checkbook? You could use paper to record your transactions, or you could use an app on your phone. It could be as simple as creating a file in your phone's notes and recording every transaction as you make it, or you could use a budgeting app to help you keep track of your spending.
Either way, you'll keep a running balance of your transactions by adding deposits and subtracting each withdrawal. This is also a good exercise if you want to see where you spend most of your money.
2. Review Your Bank Statements and Compare Transactions
You may receive bank statements via email, or your bank may hold them in a special file in their online portal. It's rare to get monthly statements on paper in the mail these days, but if you do, you can use them to balance your checkbook.
Open your latest monthly bank statement and start at the top. Compare each transaction to the records you've kept. Mark off any transactions in your records that cleared your bank account. Add transactions to your records that you may have missed and appear in your bank statement.
Add up withdrawals that haven't cleared and subtract them from the balance. Add up deposits that haven't cleared and then add them to the balance. This number is the amount of money you have available to spend.
3. Use Your Bank's Checkbook Balancing Tools
Some banks offer special online tools that are connected to your account to help you quickly and accurately balance your checkbook.
If your bank offers this service, simply log into your bank account, choose the online checkbook balancing tool, and enter transactions that haven't been posted to your account and deposits that haven't gone through. The computer will produce your available balance.
4. Contact Your Bank if You Find Mistakes or Suspect Fraudulent Activity
If you don't recognize a transaction, call the bank to get more information. You may have been charged for a subscription you previously canceled, your card number may be compromised, or you may have made a mistake and forgotten you authorized the transaction.
A bank representative can offer more information about the origin of the transaction. They can also help if you discover fraudulent activity.
Why Balance a Checkbook?
Your online account history shows your recent and pending account activity, but it doesn't show checks you've written that aren't cashed yet. It also doesn't show bills that you have on autopay that are about to go through your account.
Your balance as it appears in your bank's online portal may not be accurate if you figure in outstanding checks and payments that are about to clear.
For example, if you have $600 in your checking account, but you put gas in your car this morning (which usually triggers a $1 authorization charge until the correct amount clears) and you paid off an old debt of $450 by mailing a check last week, you don't have $600 available to spend. After the check clears, you'll have $150. If you spent $60 at the gas station, your actual available balance is $90.
You may be able to swipe your debit card to pay for a $140 purchase today, but when the $450 check goes through your account, you'll be overdrawn by $50 plus the fee imposed by your bank. If your bank chooses to deny the check, they'll send it back to the company you tried to pay, which could trigger additional charges from that company.
Balancing your checkbook helps prevent overdraft fees, returned check fees, and bounced checks. Balancing your checkbook also helps you identify unauthorized activity on your account. If you find charges you don't recognize or didn't authorize, it's crucial to let your bank know right away so they can issue a new debit card and refund those charges.
Final Thoughts
Balancing a checkbook may sound like something that adults did in the 80s and 90s. While that's true, it's also a good way for you to keep track of the money you've spent and prevent overspending, which could trigger fees.
Balancing your checkbook also allows you to keep an eye on your account so if there's a problem with fraud, you can avoid being held liable for charges you didn't authorize.