So, you have taken that big step, that giant leap into the abyss of commerce. You went and decided to start a business. You’ve incorporated, partnered or formed an LLC, got an EIN, a reseller’s license, maybe a dba, and opened a bank account.
You know in your heart that you are going to do fantastic, have fun, and make lots of $$$$! You may even have thought about how your customers are going to pay you: cash, checks, money orders, bank wires, bartering? I left something out, didn’t I? I didn’t mention credit cards. Any business in today’s cashless society has to accept credit cards. Unless you’re selling hot dogs on the corner, frankly, you won’t survive without accepting the almighty plastic. I know, it used to be the almighty dollar, times have changed. Continue reading
The idea behind allowing employees to have their own company credit cards tends to be focused on security and convenience. There is simply too much that can go wrong by handing an employee cash— there is no protection against it getting lost or stolen, and it can’t be canceled and reissued. When it’s gone, it’s gone.
Checks are an alternative, but then you have to write out a check to every single vendor your employee does business with— not to mention many businesses aren’t thrilled about accepting checks, even business checks. Hotels are a perfect example: if your employee is traveling and needs to stay the night out, it’s unlikely a hotel or motel will accept a secondhand check as a form of payment.
If you’re still giving your employees cash or checks to conduct business regularly with, it’s time to consider the convenience of a business credit card. Before you hand one over, however, here are a few things to keep in mind.
One of the biggest challenges for young entrepreneurs when they are trying to start up a business is of course securing sufficient funding. The most common hurdle is the fact that they have not yet managed to build up a good credit rating. Let’s take a look at some of the ways to get ahead despite a poor credit rating.
A credit score is fairly important when it comes to raising finances for your business, the higher the score the easier it will be to get loan or some other form of financing. However, it is not the be all and end all – you can still get funding with bad credit. The key is choosing appropriately so that you can begin to build up your credit so that when the time comes to move to the next level your business will have sufficient credit to do so.
Do Not Depend On Credit Cards & Bank Loans
It has recently been suggested that only 25 percent of entrepreneurs use traditional credit cards and bank loans to meet their start-up costs. That is actually great news for those seeking funding as it means that the majority of entrepreneurs are getting money from sources that are not so dependent on credit scoring. There are plenty of ways to fund a start-up which do not involve taking out a bank loan.
Odysseas Papadimitriou, CEO of CardHub.com
Small business owners are basically living in the dark ages. No, I’m not referring to the aversion many mom and pop stores seemingly have to the power of web-based marketing or even how tough it is to become successful in the currently gloomy economic climate. Rather, I’m talking about the fact that politicians and financial regulators don’t seem to think that small business owners are worthy of the same rights and protections as the general consumer population.
While the CARD Act of 2009 has proven to be a huge success – adding transparency and fairness to the personal finance industry – it doesn’t apply to credit cards branded for business use. That’s alright, you might be thinking; small business credit cards are just different, right?
So you have your new corporation or LLC formed… great! Now the next task on your list might be to build credit for it, but how do you do that?
In many ways, building credit for a new business is much harder than building personal credit. With the latter, there are a plethora of entry-level cards for students and people with no credit history. Unfortunately, you will be unlikely to find starter cards like that for businesses.
Pre and Post Recession