Should You Use a Credit Card or Debit Card for Your Small Business?
March 29, 2006 - Submitted by Citizens State Bank

As business owners and managers address the financial services they need, business credit cards are an important tool to assist with cash management and financial reporting.

Today over 65% of small businesses use a credit card for expenses, but only 40% use a business credit card. Using a personal credit card for business expenses can be a dangerous practice.

A small business credit card can provide many benefits to your business. If you are adverse to using a credit card, the new debit cards look like a credit card but act like a check, accessing the cash in your business checking account.

Build Business Credit. As your business grows, you will need credit lines or loans to grow your business. A new business can establish good credit by using their business credit card.
Easy Itemization. Tracking your business expenditures at year-end can be difficult and time-consuming. Most credit card companies will provide you with a year-end statement with itemized and categorized transactions. Your small business credit card helps you avoid digging for receipts at the end of the year.
Avoid co-mingling of funds. Mixing your business and personal transactions makes transactions difficult to track. This also creates potential tax and money management problems. By using a small business credit card, you will let the IRS, your accountant and your banker know you are serious about your business.
Manage Employee Spending. Another plus to small business credit cards is the ability to provide cards for your employees with preset limits. Separate statements for each employee can help you to monitor spending.
Special Rewards. Business credit cards now offer reward and discount programs for small business credit card users. Discounts and rewards on office supplies or travel can help lower your business expenses.

A small business credit card is like most financial instruments. Responsible use of credit can help your business to grow and prosper. If you monitor spending, avoid taking cash advances and pay your bill on time, you can build great credit that will benefit your business for years to come.

Citizens State Bank, a locally owned and operated community bank, specializes in serving small to medium-sized business owners in Macomb and St. Clair counties. To learn more about Health Savings Accounts, contact Citizens State Bank at 888.598.8900. Learn more about Citizens State Bank at www.mycommunitybank.com