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.
The Time is Now
When should you start saving for retirement? The simple answer is, if you aren’t already saving for retirement, you should start saving now.
Retirement may seem like a long way away, but it will be here sooner than you think. When you start saving for retirement early on, you benefit from the power of compound interest. You get your money working for you instead of the other way around.
In this article we will also look at different saving strategies depending on when you begin, why it is important to start saving early and what to do if you cannot start saving until later on in life.
When to Start Saving
You should start saving for retirement as soon as you are able to. If possible, it is best to start saving for retirement in your 20s, after you graduate from college and start earning a paycheck at your first full-time job. That’s because the sooner you start saving, the longer your money has to grow and benefit from the power of compound interest.
You may have heard of compound interest before. It’s when you earn interest on interest. By continually contributing toward your retirement over time, you can take full advantage of compound interest and watch as your retirement savings grow.
If you are no longer in your 20s and you did not start saving for retirement, there is no need to panic. There tends to be a lot of competing financial priorities in those early years. Besides saving for retirement, you may have student debt and be saving for a home or a wedding. There’s only so much money to go around. By taking a balanced approach, you can save some money toward retirement as well as your other financial goals.
Although it is better to start saving as early as possible, it is never too late to start saving for retirement. By getting into the habit of regularly contributing to your retirement savings, a little can go a long way. By contributing a small portion of your paycheck toward retirement, it will, over time, grow to a sizable nest egg for you to draw on in your golden years.
Saving Strategies Based on Your Age Bracket
If you begin saving in your 20s, you have the benefit of time on your side. If you are 20 years old and you plan to retire at age 65, you have 45 years of saving. That’s a lot of time! By regularly contributing a portion of your paycheck into a retirement account, over time it will grow to be enough to provide a comfortable retirement for you.
If you begin saving in your 30s, you do not have as long as someone in their 20s, but you still have plenty of time to save. You’ll probably want to save more aggressively than someone who started saving in their 20s, especially if you want to retire early. Figure out when you would like to retire and work your way backward.
You’ll need to figure out how much money you would need to set aside from each paycheck and the rate of return you would need to achieve. Then, you can automate your savings. That way your retirement savings are out of sight and out of mind, and you are not tempted to spend them.
Saving for retirement in your 40s still isn’t too late. Some people take the approach of focusing all their cash flow on paying off the mortgage. Once their mortgage is paid off, they redirect that cash flow toward saving for retirement. If you are doing that, the strategy can totally work.
Just make sure you are disciplined and pay yourself first. If you simply splurge and enjoy the extra cash flow instead of saving it, you will find yourself a lot further behind than those who started saving for retirement in their 20s and 30s.
The Importance of Early Saving
Although you may be healthy as a horse right now and think you will live forever, the sad reality is that we won’t be able to work forever. If you are in a blue-collar job that requires you to use your body daily, your body will eventually wear out and you will have no choice but to retire.
Likewise, if you are someone working a white-collar job, your job may not be as physically taxing as someone working a blue-collar job, but you will still want to retire one day. You won’t be able to sit at a computer and work forever.
Another reason why it is important to start saving early is because we are usually on our own when it comes to saving for retirement. If you are hoping to rely on government benefits in retirement, you are going to be in for a rude awakening. Government benefits simply won’t be enough for most people.
Likewise, company pension plans are few and far between. If you have a company pension plan, count your lucky stars. For everyone else, it is a good idea to start saving as early as possible for retirement.
Through the marvels of modern medicine, we are living longer than ever before. That means that you’ll need to support yourself longer in retirement. If you do not save enough money for retirement, you run the risk of outliving your retirement savings. This is not a fun situation to be in.
You could be forced to work in your golden years because you did not save enough for retirement. This is not a fun way to live to say the least. Situations like this can be avoided by getting in the habit of saving for retirement early on.
It’s Never Too Late to Save
As mentioned earlier, sometimes it just isn’t possible to save for retirement early on. Maybe you are struggling with student debt, or you are having trouble finding a decent job after college. With the lack of financial literacy at schools, sometimes you do not learn the importance of saving for retirement until later on in life. If that is you, what do you do?
The good news is that it is never too late to start saving for retirement. That being said, the earlier you start saving the better. As mentioned earlier, figure out the amount you would need to live comfortably on in retirement. Then, work your way backward.
Figure out theexact amount you would need to save from each paycheck to meet your retirement goal. Although it is probably higher than if you had started earlier, by starting now you can at least get caught up and start saving toward a comfortable life in retirement.