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.
Saving up for Your Dream House
If you want your dream of becoming a homeowner to be reality someday you’ll need to do some careful planning. In this article we’ll look at how to go about saving money for a house. We’ll look at figuring out what fits your lifestyle and what type of account you should use.
How Much Money Do You Need for a Down Payment?
How much money you need for a down payment largely comes down to the real estate market you’re buying in. In pricey real estate markets like New York City or Los Angeles, you’ll need to come up with a heftier down payment (in dollar amounts) since the home prices tend to be higher in these markets. Likewise, the size of your down payment depends on the property type you’re buying. For example, condos and townhomes tend to be more affordable than houses, all else constant.
Once you figure out where and what you’re buying, you’ll need to figure out how much you’d like to save for your down payment. If you’ll be taking out a mortgage, most lenders usually like you to make a 20% down payment. However, if you’re a first-time homebuyer, you may be able to make a down payment as low as 3.5% (bear in mind that you’ll typically need to pay for private mortgage insurance if you’re making a down payment under 20%, adding to your monthly carrying costs).
Although there’s no right number for the size of your down payment, a good rule of thumb is to aim for a 20% down payment in more affordable real estate markets and a 10% down payment in more expensive real estate markets. That way if there’s a correction in the real estate market, you have some extra equity as buffer and you’re less likely to find yourself underwater (i.e. with more mortgage debt than your property is worth).
How Do You Figure out What Fits Within Your Lifestyle?
As mentioned earlier, a key decision about buying a home is the property itself. Ideally, you don’t want to be moving every couple years. Not only is it disruptive, you’ll be paying the soft costs of real estate over and over again. For that reason, you want to buy a property that fits within your lifestyle.
That all starts by asking yourself the question, what property type am I best suited for? For example, if you’re a busy professional, you may be better suited for the condo lifestyle. With a condo you don’t need to worry about mowing the lawn or shoveling the snow. Your monthly maintenance fees will cover those, making condos a relatively low maintenance property.
On the other hand, if you have children or pets, a house with a backyard may be an attractive option. Your kids and dogs tend to have plenty of room to play. In addition, backyards are great for entertaining and barbecues.
If you’re looking for a happy medium, you might consider a townhome. A townhome has the best of both worlds. You get more space than a condo, but less responsibility than a house. It’s a win-win for a lot of homebuyers.
By figuring out the property type, you can start looking at properties in your ideal area and determine how much of a down payment you need to save.
What Type of Account Should You Use?
Generally speaking, you’re better off using a savings account to save money for a house. A savings account provides a safe place to sock away your money and let it grow until you’re ready to use it toward the purchase of a home. You’ll want to take the time to shop around for a savings account that offers a decent interest rate to help your money grow even faster.
Unless you’re going to be saving for five years or longer, mutual funds usually don’t make sense when saving for a home. Mutual funds tend to be more volatile. You wouldn’t want to see half your down payment money vanish because the stock market takes a nosedive before your property’s closing date, leaving you with a huge shortfall.
Another place you might consider saving your money for a down payment is certificates of deposit (CDs). CDs are a time deposit sold by most banks and credit unions. CDs work a lot like savings accounts in the sense that your money is fully protected. Since your money is locked-in, CDs encourage you to be more financially disciplined, making them ideal for those struggling to save. CDs tend to offer an interest rate as good as, if not better than, savings accounts.
Determining a Timeline
Determining a timeline to save for a house comes down to your own personal needs and your income. For example, if your parents would like you to move out from home in a couple years, that will be how long you have to save for a down payment.
Your income is also an important determining factor. All things considered equal, the higher your income, the less time it will take you to save for a house. Although finding a higher paying job is easier said than done, if you’re struggling to save, creating a budget is a good exercise.
A budget can reveal areas of your spending where you can tighten your belt and save even more. For example, if you could cut 10% off your food and transportation costs, that might mean an extra $50 or $100 per month to save toward the purchase of a house.
Sometimes you can set your own timeline for buying a house. For example if you’re renting, you don’t really have a timeline for buying a house. That being said, it’s a good idea to create your own timeline. If you don’t have a timeline, you might never feel there’s an urgency to save.
Let’s say you want to buy a home in three years. Figure out how much of a down payment you’ll need to save. For example, if you need to save a $50,000 down payment, figure out how much money from each paycheck you’ll need to save to reach that goal, then set it up so the money is automatically set aside in a savings account. That way the money is out of sight, out of mind and you’re not tempted to spend it.