The Savvy Childcare Business Owner’s Guide to Business Credit Cards

August 6, 2021

Credit cards can give your childcare business leverage by helping you save money, grow your business, and keep track of spending. If you know how to use credit cards wisely, they can become a tool that will help you propel your daycare business forward. In this article, we examine the advantages that credit cards can offer you as a childcare business owner and provide several tips for getting the most out of your business credit card.

Advantages of a Business Credit Card

Using a business credit card offers several advantages to your childcare business. Here are a few ways you can benefit from using a business credit card:

  • Separate business expenses and personal expenses. Using your business credit card exclusively for business expenses will help you keep your business and personal spending separate. This is absolutely a best practice when it comes to the financial health of your childcare business. When you use your business credit card only for expenses related to the business, you establish a trackable history of transactions that can give you valuable insight into your business budget.
  • Track business expenses and optimize your business budget. When you utilize your business credit card to make purchases and payments for your daycare business, you can view all your expenditures in one place, helping you take control of your business budget and allowing you to correct issues like overspending, late payments, and accumulating interest.
  • Protect your purchases. When you purchase big-ticket items for your daycare center, like furniture or equipment, you want to have peace of mind knowing your purchases are protected. Business credit cards offer purchase protection guarantees that can cover you if something you buy for your childcare center is damaged, lost, or stolen.
  • Access financing quickly and cheaply. It can be time-consuming and tedious to apply for small business loans from a financial institution. Some business owners opt to use business credit cards to jump start the financing of their business. Using credit cards wisely can be a savvy way to access financial flexibility when you want to move your business forward.
  • Get rewarded for your purchases. Credit card companies offer a variety of incentives to get you to use their card. Some credit cards offer a percentage of cash back when you make purchases through specific retailers, like Amazon, or in specific categories, like groceries and gas. Other credit cards offer mileage points to attract frequent fliers, etc. You can decide which credit card rewards program will most benefit your business spending habits.

The key to using credit cards effectively for your childcare business is to abide by a few best practices to ensure you are practicing wise financial habits. Let’s take a look at a few tips and best practices to make sure your business credit card is a benefit instead of a burden.

Tips and Best Practices for Your Business Credit Card

Here are a few practical ways you can make the most out of your daycare business credit card:

  • Shop around for the best business credit card for your childcare business. Your childcare business has unique needs and circumstances. With this in mind, you are going to want to shop around for the right credit card to meets your business needs. Compare the introductory rates, annual fees, interest rates, and rewards programs offered by the leading business credit cards. Decide which one will most benefit your childcare business. Choosing the right credit card is the first step to using credit wisely to build your business.
  • Pay off your credit card balance every month. As with personal finances, abide by the best practice of paying off your business credit card balance every month. Business credit cards often accrue interest at higher rates than personal credit cards, so it is essential that you don’t waste money by carrying a balance on your business credit card. Here’s a tip: credit cards charge interest daily, so if you are having a difficult time making a practice out of paying your monthly balance, try setting up weekly automatic payments in an amount that works for your business.
  • Get rewarded for your business purchases. Did you know that credit card rewards are not generally considered taxable income by the IRS? Instead, they are treated like rebates for purchases. This is great news because credit card rewards programs can save you a lot of money on purchases you need to make for your childcare business. For example, the average daycare center spends $2,000 per month on Amazon. When you take advantage of the Amazon Store Card’s 5% cash back program you could save $100 or more per month on business expenses. These savings add up fast!
  • Negotiate your credit card interest rate on an annual basis. Set up an annual appointment with yourself to call your credit card company and negotiate your credit card interest rate. You would be surprised what credit card companies are willing to do for you if they think you might abandon their card for one with better terms.
  • Beware of “jumping” from one credit card to another. You may be tempted to open up a new business credit card whenever you see a great rewards program or other attractive perks. Be careful. As with personal finances, more is not always better. Having too many business credit cards is a slippery slope that can add unwanted confusion and expenses to your business budget. Evaluate your decision carefully before opening another credit card.
  • Review credit card statements every month. Make sure you review your credit card statement each month to identify any unnecessary expenses, such as subscriptions you don’t need, transactional errors, or personal expenses that should not have been charged to your business credit card. Keeping track of your spending habits is a great way to cut down on unnecessary spending and save money.

Now that you know how to take advantage of business credit cards to save money, grow your childcare business, and keep track of spending, it’s time to take the first step toward financial success and partner with a team of accountants who are in your corner. The experts at Honest Buck Accounting can help you formulate a financial strategy that works for your childcare business so you can achieve your business goals. Schedule a discovery call with us today!

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