As advantageous as your business credit card can be, it can be just as disadvantageous as well. So how do you make sure you enjoy only the good and not suffer from the bad? By making sure that every purchase you make is at a good time, and not at some instance in which it can lead to trouble. Credit card debt is easy to accumulate, and when you use it a situation in which you should not, you just make this debt uncontrollable.
Here are the most common situations in which you should avoid using your business credit card. Should you fail to abide by this, you will incur financial problems for yourself.
Okay, so you fear that you will not be able to pay the balance that you accumulate on your card once you make that transaction? If this is so, just do not make that transaction until it is absolutely important. Even in this case, you will have to make sure that you at least pay the minimum amount, which will be charged by the credit card company.
There is a maximum credit amount on your business credit card. Spend more than this, and you will have to pay a penalty. In some cases, there is no penalty, but you are charged a higher interest rate which makes the situation even worse. So if you are not aware of your available credit, avoid spending the card altogether.
Better yet always be aware of the limit which you have available and keep a track of it for the entire month.
If you already have accumulated a massive debt on you business credit card, avoid using it until you pay it all back. Not doing so will increase your debt even more and it will soon become unmanageable. So until you pay back all remaining balance, you can keep your card away.
Mixing business and personal finances together is one of the biggest mistakes made by entrepreneurs. This makes it difficult to keep a track of your expenses, analyze your cash flows and assess your financial situation. Though these problems will solve if the expenses are sorted out, you should still not get into the habit. Doing so will complicate your taxes and may even lead to an audit. Moreover, if your business closes down, you will become personally liable for the debt.
Business credit cards can easily be spent on the internet, but do this only if you trust the company. There are many websites which fool customers and steel their personal information for their own purposes. So until you are absolutely sure of the authentication of the website and the company, do not provide any of your card details.