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by: LornaShea
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Word Count: 696

If you are setting up or already run a small business, you might need a way to separate your business expenses from those that are purely personal. The best way to do this is to set up a business credit card account, which will then allow you to make business transactions either by telephone, using the Internet or in person. If you authorise business credit cards for any of your employees, then they will have access to these facilities as well.

Initially, you will need to work out how the credit card will be used and to do this, you'll need to work out the amount of credit that your company will actually need. It is a good idea to work this out in accordance with your monthly outgoings, as your company will be paying the credit bill on a monthly basis. Once you have calculated how much credit your company can afford to borrow, you should then try and assess how many cards your company will need and which of your employees will be authorised to carry and use them. This may mean that you will need to employ a system that keeps track of your employees' expenses. There are some credit card companies that offer a facility which reports the use of a credit card and allows the relevant data to be downloaded to accounting packages, such as Sage.

There are similar services and facilities for small businesses, although they are not necessarily a mandatory part of a small business credit card account deal. There are credit card companies that do offer a 'tracking' system with their cards that allows the manager to 'keep an eye' on the expenditure of employees and, in some cases, there is the facility to download that data onto the relevant account package, such as Sage or Quickbook. This can mean that small business managers may have to develop systems to oversee their employees' business expenditure, making sure they stay within an agreed spending limit.

It can work in your favour if you are able to apply to an institution with which you already do business; this way, you are more likely to be considered for favourable interest rates and higher credit limits. However, it is very important that your calculations reflect your company's ability to meet the monthly repayments; as the director or manager of a small business, the company's credit is likely to be tied in to your own personal credit score. Any late payments or unauthorised debt can have a negative impact on your own personal credit rating and hamper your company's capacity for further credit. You should also make your employees aware that the card is not to be used as a simple substitute for cash as the transaction fees can be high and related interest is immediately incurred.

You can research the deals, interest rates and other facilities of most cards, by using an online comparison site. These display the relevant information of most cards in an easy-to-read table system, so that you can quickly compare the benefits and pitfalls of each card.

Where corporations can be approached by financial institutions, small businesses have to apply for credit. It can help the application if it is made to an institution with which the small business manager already has an account. This way, the credit card company can then more quickly assess the credit history of the individual. If it is good, application is more likely to be approved. However, if the individual has a negative or poor credit rating, that can have consequences for that person's business credit card account application - credit limits are likely to be lower and interest rates are likely to be higher. A business credit card account, in terms of a small business, is a way of keeping the manager's personal spending separate from the expenditure of their business. Yet, as with a personal credit card, a business credit card account , it has to be managed sensibly in order to maximise the available benefits: repayments must be made on time, as the incurring of any penalties cannot only impact upon the business, but also upon the credit score of the small business manager.

About the Author

Lorna Shea looks at the pros and cons between Business and Personal Credit Cards. Read this informative article helping you to research the best Business Credit Card deal online

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