Tisha Kulak works with a credit card service, Creditorweb. Recently she asked if she might put together something about small business and spending as a guest post for this blog. I encouraged her to do just that.
START UPS NEED SUPER CONTROL OVER SPENDING
by Tisha Kulak
Small, start up business owners need to be conscious of spending.
Just because a credit card is in the name of your business, you can’t go on spending sprees and expect to be in the clear. Credit cards designed for small businesses can help you get through some rough patches in the beginning. You may need to finance some equipment to get you started or perhaps charge some marketing expenses to a company card.
The reality is your business finances still remain firmly on your shoulders. Unless you start out with a multi-million dollar contract, your income from a start up business may be more variable than you can imagine. Many entrepreneurs spent time as an employee before venturing out on their own. That employee job came with a steady paycheck. Owning your own business full time does not necessarily make the same promise. Often it takes months to seek out qualified job prospects and more months to seal a deal. Even if you manage to score a few deals right from the start, they may not be so lucrative because you might make financial sacrifices to snag the job.
Small business credit cards do have advantages such as reward programs that offer discounts of office supplies or cash back incentives. However, it’s wise to monitor spending constantly and not simply go wild with purchases to get the rewards. Expense tracking is essential — to maintain a realistic view of your income and expenses and to charge what you can afford to pay off each month. It is important when you contemplate credit card offers and credit companies that you always read the fine print. Make sure you have an understanding of what the rewards programs are and what it takes to accumulate them. If you need to spend thousands of dollars each month to get a couple of bucks back, move along to another offer.
Itemize your credit card statements each month and note which expenses to which part of the business. Make it a point to not mix business with personal, even though you are responsible for both. At the end of the year when you are analyzing your records for tax purposes, the one thing you don’t want is more work to do, sorting through 12 months of expenses.
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Tisha Kulak is a writer for Creditorweb.com, where she writes about business credit cards and responsible credit card use.
Thanks, Tisha, for the quick seminar!
–ME “Liz” Strauss
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