(805) 765-4112

Call for Free No-Obligation Quote

Providing Service

in Ventura County, CA

a
Is it vital to have two separate credit cards for my business and personal transactions?

March 9, 2020

The simple answer is YES; you’re right.

Like oil and water, personal and business finances don’t mix well. Opening separate credit card accounts for each may be one of the most straightforward ways to establish a clear division between personal and business expenses. Separating business and personal credit cards can help you better manage your money.

Consider the following advantages:

It can raise your business credit score.

A company credit card can assist you in increasing your borrowing power when taking out a small business loan, assuming you pay it off on time. A clean credit report might also help you get lower interest rates and show the legality of your small business.

It may help you preserve your personal credit.

Another benefit of establishing distinct accounts is that you will not have to finance business transactions on your personal card, reducing the risk of exceeding your credit limit. Unless you default on your business credit card transactions, they won’t appear on your personal credit report. When your personal credit score takes a hit because you reached your credit card limit, it’s worth noting that banks use the same formula to determine how great or unreliable a customer is.

It can assist you with tax preparation.

Most credit card companies provide simple tools for producing customized reports that track your company’s expenses by category. Many of these costs are tax-deductible. When it comes to your tax return, you’ll need two distinct and detailed reports from each of the businesses. These separate, itemized statements will make things simpler for your accountant when preparing your taxes.

In a nutshell, having to separate business and personal purchases at the cash register might be time-consuming. However, once you’ve established your credit card accounts, you’ll see that maintaining them independently will save time and provide peace of mind. This can result in a clean financial history and avoid headaches as your company grows.

At Ten Key Accounting Solutions, we specialize in helping small business owners organize and maintain their accounting systems with efficiency and professionalism. Contact us today for a free no-obligation analysis and quote.

Resources

Helpful Articles

Why do we need accounting?

Why do we need accounting?

The role of accounting in business and why it's important Can I start by understanding Accounting basics? Accounting describes systematic records of transactions made during a transaction: the assets, liability, equity, revenue, and expense accounts. The balance sheet...

What do accountants do for small businesses?

What do accountants do for small businesses?

Accountants are responsible for managing the day-to-day financial operations of a business, as well as providing advice and consulting services to help manage the company's finances. In short, accountants provide management with reliable data they need to make smart,...

How can QuickBooks help my business?

How can QuickBooks help my business?

What is QuickBooks? Intuit's QuickBooks is a comprehensive enterprise and financial management software that includes features for accounting, inventory, payroll, tax filing, bill creation, invoicing, bank account monitoring and reconciliation, expenditure tracking...

Why an Accountant Is Crucial For Your Business Success

Why an Accountant Is Crucial For Your Business Success

A good accountant is the backbone of any business. They can help you find ways to reduce taxes, negotiate contracts, and even teach you how to be a better business owner! Let's take a look at five reasons why you should hire an accountant for your business. 1) A Good...

How to determine if you really need an accountant

How to determine if you really need an accountant

The line between professional and amateur is often blurred. And with the advent of new technologies, it's becoming even more blurry. More people than ever before are turning to paid services for tasks that they used to do themselves: building a website, taking...

3 Reasons Why You Shouldn’t Mix Business and Personal Finances

3 Reasons Why You Shouldn’t Mix Business and Personal Finances

You may be wondering why you should have separate finances when it is so convenient to do so. But there are three main reasons why you shouldn't commingle your business and personal finances. First, it will make taxes more complicated because now you have to determine...

Stay Up to Date With The Latest News & Updates

Join Our Newsletter