Freelancers run into financial stress at times, and having a business credit card available is the ideal way to ensure that funds are available for business expenses. Business credit, when you are a freelancer, is based upon your individual credit score. If your personal credit history is tarnished, consider cleaning it up a bit before applying for business credit as infractions can result in a denial.
The need for extra cash is almost always there for freelancers. This might be for marketing needs, replacement equipment or the varying other expenses that freelancers have. Just knowing that this safety net exists when a client pays late or completely skips out on a payment that you really need is a relief.
Having a business credit card as a freelancer also helps you develop business credit. It is important to have credit because moving to an office or purchasing a new computer is imminent at some point in your career and you will likely need credit for both of those items.
Use Business Credit Cards Responsibly
It is important to be responsible with your business card. Some business cards are restricted to purchase made only for work purposes. Others are general use cards. Make sure that you read the terms and conditions for using the card so that the account is not put in jeopardy.
Responsible buying is essential to prevent business debt from piling up. Working just to pay off business credit card debt often leads freelancers to financial ruin.
Replace Office Equipment
One of the most important reasons that a business credit card is a good idea is that office equipment doesn’t often provide a warning sign that it is about to quit working. When you don’t have the necessary funds on-hand, the card is your backup. Making timely payments helps you to have the right equipment for the job.
The different categories of freelancers brings upon different office equipment requirements.
Typical office equipment required for freelancers:
- Multi-function printer
- Landline phone system
- Desktop or laptop computer
- Fax service
- Filing cabinets
- Writing utensils
- Desktop calendar
These items can be purchased with a business card and can be written off as a business expense. This is a perk of having the card available. The ability to buy now and pay it off over time is often a blessing to those that are just starting out or are in a slow period.
Pay Business Bills between Pay Periods
The bills that the business has don’t always coincide with when a client pays you. For this reason, the business credit card is available. Make sure that the bill is a business related item. It is best, even as a freelancer, to have a business name that is registered. The utilities or services for the business should be in the business name.
Some business cards have rewards programs to earn points, cash back or even airline miles. These come in handy. Points can help you earn gifts of your choosing that will benefit how you work. The cash back helps reduce your owed balance and the miles are great when you just need to get away for a little bit.
Freelancers should have one credit card. Emergent situations arise and having the ability to replace items, pay an emergent bill or just make sure you have what you need. Responsibility is key when it comes to having the “power of plastic” in front of you. If you fear overspending, search for a business card that limits your spending to only business related items and not personal purchases such as clothing, groceries or household items.
Image source: Business Week