According to recent reports, as many as 49% of small business owners use personal credit cards for business use. This statistic is alarming for several reasons:
First, by using personal credit cards for business purposes, the owner is mixing their personal and business finances and could be compromising the liability protection provided by the corporate structure of their business.
Second, every business owner relying on their personal credit cards is putting their personal credit at risk for the sake of their business. This is a bad idea, because if the business starts to have problems their personal credit rating could suffer substantially. Many people have had to file personal bankruptcy because of debts that actually belonged to their business’s.
Third, business owners who use personal credit to finance their business are foregoing the opportunity to use credit cards to build business credit. Instead of giving their business a safety net of credit and further protecting their personal finances and credit, they are jeopardizing the business’s financial well being, their own credit, and their own financial well-being.
As you can see, I’m not exactly a fan of using personal credit cards for business. It’s just a bad idea. You are much better off separating your business expenses out onto business cards, reporting to business credit bureaus, that are not in any way tied to your own personal credit.
Contact us today to talk more about obtaining financing and building business credit for your business.