One of the biggest issues many small business owners may face in the course of their daily operations is that they may not always have the case on hand to make the purchases they deem necessary. For this reason, it may be wise for entrepreneurs to carefully review the terms of their accounts to make sure they’re doing everything right.
Many owners may know that the ways in which consumer credit cards can afford people certain protections was dramatically overhauled by the federal government following the recent economic downturn, but they may also assume that similar measures were granted for cards issued to businesses as well, according to a report from TIME. However, this is simply not the case. In fact, a number of things that consumers may now take for granted on their personal cards – such as safeguards against sudden changes to their interest rates or fee structures – can still happen with little warning at all for their corporate accounts. Further, because many small business owners have to list themselves as co-signers to get the first cards for their companies, they may be personally on the hook for any credit mistakes made by their enterprises, such as late payments or racking up large amounts of debt.
Of course, a number of studies in the past few years suggest that having a credit card can also be extremely helpful for small businesses, particularly as they try to expand, the report said. For instance, companies that have credit cards are also more likely to be able to hire, perhaps because of the added financial flexibility these accounts may afford them overall. Further, if used correctly, cards that provide account holders with rewards such as cash back or airline miles can actually provide companies with a significant benefit.
For this reason, it may be vital for owners to make sure that the employees who use these credit cards are following careful instructions to make sure no potential problems crop up in using them. However, those who want to put their companies on sounder financial footing overall, with or without having a credit card, may also want to ensure they’re finding the most affordable small business insurance options. Reducing costs for liability insurance and other popular types of coverage may be vital to helping safeguard companies’ bottom lines against any potential hiccups they may encounter.