Protecting yourself from the unexpected

 There are so many aspects to owning a home business other than, recruiting, driving traffic to your sites, generating leads, and making sales.

For the last couple of years I have turned my focus onto these aspects of business and I would like to share a little tip to help you save more money in your daily business activities and protect yourself from the unexpected.

As you know in business there are plenty of ups and downs, some months aren’t necessarily great months while other months can be record breaking.  Even if the sales aren’t there usually the bills are.

So what can you do to assure yourself that you are protected?

One of the main things that you can do is to get yourself a dedicated business credit card.

If you have a business checking account, chances are that you were issued a debit card that came along with it.  This is just a guess but most people tend to use this card as their main purchasing method.

Unfortunately this is NOT a very good idea.

By using your debit card you are opening yourself up for the unexpected.

This means by using your debit card for ALL or most all of your transactions you are giving those you do business with direct access to the cash in your business.

Let me explain that a little further…

Your business revolves around your checking account, chances are all the money your business has is in that account.  If you use your debit card, you are directly linking people to your entire cash reserve.

The more you purchase with your card the more opportunity you give people to access your cash.

The best way to get around that is to get a dedicated business credit card and use that instead of your debit card.

Not only will that put a barrier in front of your cash but it will also give you a ton of other benefits…

So what are these benefits?

1.     Balancing out expenses on slow months

By having a dedicated credit card for your business your aren’t relying on your bank balance to help you out with expenses.

A credit card allows you to roll over your expenses/purchases on those inevitable slow months to the next months when business picks back up. This of course is depending on the type of card that you choose, which I will get to in a minute.

Most business type credit cards come with a larger purchasing balance than what may be in your checking account.

2.     Rewards and cash back

Most credit cards come with some great benefits such as, rewards points, airline miles, and cash back.

So depending on how much you spend running your business each month you can accrue some big benefits.

Maybe a free company trip with all your airline miles, or a new computer with the bonus points that you get, and my personal favorite is the cash back.

On our company card we actually save 2% on the monthly balance if we pay it off by a certain date.  This could add up over the year for some big savings.

Now of course the benefits that you get pertain to the type of card that you get.

3.     Makes book keeping much easier

Another great benefit from using your business credit card is that all of your expenses are all reported in one convenient location, making book keeping a breeze.

Most credit card companies itemize all of your expenses in a convenient report on your bill each month, and if you use certain types of cards they will even send you a report at the end of the year with all your expenses laid out.

In our case we use American Express, which is a great card for business, each month and at the end of the year they give us a report on our expenses, spending, and which categories they fall under.

So which card is right for your business?

As mentioned before we use American Express for several reasons.

Amex seems to really take care of their customers.  They work with you as your business grows.

In my case I have two business credit cards with them.  A platinum card that I use for my personal business expenses and an Amex Plum card that we use for most all of our daily and monthly expenses.

The only problem with a platinum card is that you have to pay off the balance on it each and every month.  However the travel and other benefits from it are hard to beat.

As for the Plum card, I really like it for the reason that they are very flexible.  If we have a slow month that card allows us to roll over the balance for up to 2 months by just paying 10% of the balance without any finance charges.

They reward you if you pay off your balance early each month by giving you 2% “cash back” on your balance.

So for instance, if you had a Plum card and you spend $10,000 on it in one month and you pay it off early. 

Amex will give you $200 off your next month’s bill.  That is an instant savings of $2400 a year just for using your card and paying it off each month in a perfect world.

One other little downfall with using Amex is that they are not accepted everywhere.  I have only run into a couple instances where they didn’t accept an Amex for payment.

The benefits definitely out weight the small downfalls.

Now Amex may or may not be the card for you.  So it is important that you do your research and find a card that fits in with your spending habits of you and your business.

Visa and MasterCard also have some great cards that you may also want to consider.

When looking for a card, be sure to think about the benefits and rewards that they have available and how that will work with your business. 

Decide whether you want airline miles, cash back, or rewards points.  Also figure out what your monthly spending limit will need to be in order to not have to worry about it.

In some cases with a card with rewards points, the points can be used as cash back, or can be redeemed for airline tickets.

Be sure to use your best judgment and find the right card for the right fit for you and your business.

As you can see by having the right card for your business you can protect yourself and your cash, along with possibly some really big savings along the way.  With the right card you can technically even make some money off your spending. ;)

As you can see the little things in business can be a big deal.

Talk to you soon,

Justin Christianson
CFO Partner Magnetic Sponsoring LLC

* I am an not a legal or financial advisor. This article is for entertainment purposes only. If you have question be sure to seek advice from a professional.