Category: Finance

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Do I need a business credit card?

You’ve already got one personal credit card – or maybe more. So do you really need one for your business too?

Having a credit card for business use can actually be a very smart move.  This is because a credit card can effectively give you a one month interest-free loan – if you use it responsibly, that is. Businesses often find they need to pay for something while they are waiting to be paid themselves. So you’ve earned the money, but your client hasn’t yet paid you and in the meantime you need to buy more stock, a credit card can help you bridge this gap.

Another reason for using a credit card is that you are more likely to get your money back if you’re a victim of fraud than you are with a debit card.

But do you really need to go out and get a business credit card? If you’re just starting out and you’re not spending much on your business, then it may just be easier to use your personal credit card. (You may want to check the card’s terms and conditions to make sure they allow this, though). But once you’ve got going, it’ll probably be easier if you separate your business credit card purchases from your personal ones.

Here are some things to think about when you compare credit cards:

APR (Annual Percentage Rate)

This is the annual charge of the card based on the cost of purchases, but won’t usually include fees for things like late payment or withdrawal fees.

I had a quick nose around the web and found that the APRs for business credit cards had a similar range to those for personal cards. That said, there was a wide range of APRs on both business and personal cards, so do shop around if you’re looking for either.

Minimum repayment

Credit card providers will require you to make a minimum repayment you need to make each month. You can compare both this and the fee you’ll be charged if you miss a payment.

Fees

Both personal and business cards can charge an annual fee, although this seems to be much less common for personal credit cards than for business cards.

Other benefits to compare

Some personal credit cards offer rewards such as Nectar/Tesco clubcard points or cashback and some business cards offer discounts on AA cover or travel insurance. Both types of card can offer balance transfers.

Minimum income

Most of the business credit cards I checked needed you to have a minimum income expected income of £10,000 over the next 12 months. Many personal credit cards don’t specify a minimum income.

Credit limit

This is the maximum amount that the credit card company is prepared to lend you on your credit card. It’s always good to have some spare credit available on your card to allow for interest to be added. Otherwise you may go over the limit and be charged a fee.

And finally – keep a good credit rating

Your credit rating is the financial information held about you at the credit reference agencies. Most companies that offer credit (for example for mortgages or mobile phone contracts) take your previous credit history into account, so it pays to keep a good credit rating.  You can do this by paying your bills on time and staying within your credit limit.

Here are other articles in this series, why not take a look…?

Do I need business insurance?

Do I need a business phone line?

Do I need a business bank account?

Do I need a business plan?

Note: this information applies to UK readers only.

Image courtesy of David Castillo / FreeDigitalPhotos.net

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The ins and outs of accident and sickness insurance

If you are self-employed, the chances are that from time to time you worry about just how you might cope if you were ill and unable to work.

Unlike a conventional employee, you are not going to benefit from your employer paying your salary for a specified period of time.

That’s why, it might be worth finding out a little more about accident and sickness insurance (companies such as Drewberry Accident and Sickness Insurance are specialists in this area).

Sickness and accident cover

This type of cover typically breaks down into two.

Some policies will pay you a regular monthly income in the event you are unable to work due to an accident or sickness.  Those payments may continue for a specified period of time of perhaps one or two years. (There are also rare policies that may run for up to 60 months).

It might be typically possible to also include unemployment cover in such a policy, though that would normally only pay out for 12-24 months (depending on the provider) and clearly might not be applicable in situations where you are self-employed.

A form of similar cover is traditionally called income protection insurance, which would continue to pay you a monthly income over an extended period of time perhaps up until your normal retirement date.

In both cases, the amount of monthly income would depend upon the policy you have selected but is normally available up to a maximum specified percentage of your previous income level.

Circumstances covered

A range of illnesses and accidental injury might be covered by these types of policies.

Broadly speaking, they may be claimable against in circumstances where you were able to obtain medical evidence that you were unable to work due to a specified medical condition.

It is worth noting that some insurance providers use the definition of own occupation whereas others might use that of suitable occupation.

This is a very important distinction because a policy written under the auspices of own occupation, might typically pay out in a situation where you were unable to continue with your normal work.  By contrast, a policy definition of suitable occupation might mean that the provider would expect you to take alternative occupation, other than that you would normally engage in, if you were physically able to do

As you might anticipate, all policies contain terms, conditions and exclusions.  You should read these carefully and seek the advice of an experienced broker, if necessary, to explain them to you.

Typically, this type of cover might exclude circumstances where you were purposefully responsible directly for your inability to continue work.  Examples might include things such as elective cosmetic surgery, pregnancy, engaging in criminal activities, the use of so-called recreational drugs or injury in highly dangerous sports etc.

Reassurance

If you are unfortunate enough to be unable to continue to work when you are self-employed, you may find that very quickly your financial situation deteriorates and perhaps even things such as your home are put at risk.

Having some form of on-going monthly income from this type of policy might just enable you to continue a relatively normal life until such time as you recover your health.

Don’t miss a thing here at Business Plus Baby   Click here to get my newsletter and  I’ll also send you a copy of  my e-book Running a business around a family: 9 steps to success.

Image courtesy of Michal Marcol / FreeDigitalPhotos.net

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If you have PAYE or employees, you need to read this now…

Today’s guest post comes from Claire Meredith of Zest Payroll Solutions…

The biggest change in PAYE reporting in almost 60 years will come into effect in April 2013.

At the moment, HMRC are only informed at the end of the tax year of an individual’s earnings and the deductions that were made over the year via their Employer’s end of year return.

From April 2013, Employers will be required to submit a report to HMRC of the payments and deductions made to their Employees before or at the time of making the payment to the Employee.  Real Time Information (RTI) will replace the annual returns that Employers are currently required to submit at the end of the tax year (the P35s and P14s).

What is RTI?

Continue reading “If you have PAYE or employees, you need to read this now…”

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5 easy steps to cut the cost of driving

For many of us, driving is a necessary part of our everyday lives. But with the average car costing us around £3,000 per year, it can be a highly expensive necessity.

However, with a bit of careful driving, the right car and the right car insurance, you can ease the cost of driving considerably. So here is our easy five-point guide to cutting the cost of driving. Continue reading “5 easy steps to cut the cost of driving”

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