When you’re just starting your business, it’s easy to pay for the things that you need from your own checking account or credit cards. It works, and there’s no reason you can’t do it. However, as your business grows, you’ll find that there are a number of benefits to having business credit, and it’s in your best interest to create separate financial accounts for your business.
Separating the Personal and Business
When you have a separate business account, the benefits is it’s easier to track your business expenses. You won’t have a purchase that combines your business and personal expenses, requiring you to highlight items on the receipt. Though your business’s credit score will initially be based on your personal credit score, over time your business will build its own score. This means that your own credit rating isn’t directly tied to the success, or failure, of your business.
Rewards
Many business credit cards offer rewards, such as cash back on all purchases or airline miles that you can use for free flights. In effect, this saves you money on everything that you buy for your business.
Financing Capabilities
If you have a business credit card or line of credit, you can finance a purchase that you need to make for your business, usually at a fairly low interest rate. In fact, the benefits are that some business credit cards offer a zero percent interest rate for a certain time period.
Tracking Expenses
If you only make purchases using your business accounts—checks, credit or debit cards—you’ll be able to easily track those expenses. In fact, you won’t have to save your receipts for tax time. You can simply use the copy of your credit card statements for the year.
Business Loans
Improving your business credit score means that banks will be more likely to give you the money you need to purchase new equipment or expand your business. Banks will be able to easily check your financial statements, both income and expenses, to determine how much your business can afford. Often, this amount is higher than if you were trying to get a loan as an individual.
