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 Do Your Own Taxes
If you work for an employer, are self-employed, or receive taxable money from any source, you may be legally required to file your taxes with the IRS each year. More than 152 million Americans filed taxes in 2020. 102 million of those filers received a tax refund because they overpaid their federal taxes. The average refund was $2,741.
If you don't file your taxes, you may be in violation of federal laws. You also won't get a refund unless you file, even if you overpaid. Do you want to know how to do your own taxes? Then keep reading.
How to Start Filing Your Own Taxes
No matter which method you choose to file your own taxes, you'll need to gather some paperwork. Make sure you have copies of the following:
- Last years tax returns
- Income documents that may arrive in the mail or electronically, including: W-2 forms from employers, form 1099-NEC from freelance or contract clients, forms 1099-DIV or 1099-INT from banks or institutions that paid you interest or dividends, and/or form 1098-T from education-related entities.
- Receipts for charitable donations
- Receipts for non-reimbursable work-related expenses
- Medical bills
- Social Security numbers and birth dates for joint-filers and anyone you'll claim as a dependent
It's smart to keep all of your tax-related documents in one place. You'll receive income-related documentation in January and February each year.
You have several options when it comes to filing your taxes.
IRS Free File
If you want to file your taxes using IRS Free File, you'll need last year's adjusted gross income (AGI) from your previous tax return to verify your identity. Many tax preparation software companies offer IRS Free File.
Tax Preparation Software
Tax software allows you to do your own taxes by simply answering a series of questions. The tax interview feature included with many tax preparation software packages makes getting your maximum refund a sure thing.
A good tax software program starts at $20 but could cost much more depending on your circumstances.
If you had a major life event, own a business, want to itemize your deductions, or need to report securities transactions, you may want to invest in professional tax preparation. In 2019, the average cost of professional tax preparation was $203. If you have complicated taxes or are intimidated by the idea of doing your own taxes, you may be better off seeking help from a professional.
How to Get Extra Time to File Your Taxes
If you can't meet the IRS deadline for filing your taxes, you can ask for a tax deadline extension. It takes about five minutes to fill out the simple request form. Even if your income exceeds the maximum allowed for the Free File system, you can electronically request an extension.
The IRS automatically extends the tax deadline to October 31 each year for taxpayers that request extra time to do their taxes. You'll have to estimate how much you'll owe the IRS and pay that amount, but you'll have extra time to properly prepare your tax filing paperwork.
How to File Past-due Tax Returns
If you were required to file taxes with the IRS in the past but didn't meet the deadline, go ahead and complete past-due tax returns, now. Filing past-due tax returns mean you'll avoid further interest and penalties if you owe taxes.
Your refund may be lost if you don't file tax returns in a timely manner. You can still get money owed to you by the IRS if you file a late return within three years of the original deadline. This includes tax credits like the Earned Income Credit.
If you need help filing your past-due tax return, call 1-(800)-829-1040. You can get wage and income information to help you file your past-due returns by filling out Form 4506-T, Request for Transcript of Tax Return.
Do It Yourself, or Hire a Tax Preparer?
Of the 152 million taxpayers that filed a tax return with the IRS in 2020, more than 69 million decided to do their own taxes. Whether you choose to do your own taxes or hire a professional to help you with the paperwork is up to you. Taxpayers aren't legally required to hire (and pay) someone to do their taxes.
Qualifying taxpayers can get free help with tax filing. The Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs offer free services for basic tax returns. To qualify, you must make less than $57,000 per year, have a disability, or have a limited ability to speak English. People over the age of 60 can get help with questions about retirement or pension-related tax issues.
If you prefer to do your own taxes, it's wise to invest in tax software. Tax codes are updated every year, so you'll need the most recent version of the software you choose to help you file correctly.
Compare costs when deciding whether to do your own taxes. For some people, the process is intimidating, so they prefer to hand over their records to a professional. Other people don't mind going through the steps with help from tax software. In years past, doing your own taxes meant piles of paperwork and time-consuming calculations. Now, it's easy to get tax software to do the heavy lifting. You just have to plug in the numbers.