| When a new business owner applies for a | | | | their cards with extreme caution. As much as |
| business credit card, one of the first things the | | | | possible, business owners should pay off their |
| bank would consider is his personal credit history. | | | | balances in full each month. Paying off your |
| Of course, a high credit score would most likely | | | | monthly charges reduces the risk of uncontrolled |
| guarantee an approval while a poor credit score | | | | debt. It also eliminates the need to pay additional |
| may lead to rejection. Clearly, business credit card | | | | costs such as the interest rate and penalty |
| issuers greatly rely on one's personal credit when | | | | charges. |
| approving credit card applications. | | | | Another habit that entrepreneurs must avoid is |
| What About Personal Liability? | | | | using this card for personal expenses. For |
| As the owner of the company or the business, | | | | instance, you may be tempted to charge your |
| submitting your personal credit history for review | | | | groceries or restaurant bills to your card especially |
| would mean that you take responsibility for all the | | | | if you have a high credit limit. But combining your |
| charges that would be incurred in your account. | | | | personal and business expenses into one account |
| This is called the "personal liability clause" and is | | | | would make it harder for you to track your |
| included in your Agreement. | | | | business spending and make finance-related |
| What does this mean? Every business involves | | | | decisions. |
| some risks and in case things do not work out as | | | | When distributing supplementary credit cards to |
| expected for your company, you would still be | | | | your staff, good judgment is a must. Aside from |
| personally accountable to pay for the debts in | | | | choosing only your most trusted employees, you |
| your account. Whether your business succeeds or | | | | must also keep a close watch on how they use |
| fails, you are liable for the charges in your | | | | your business account. Always check on your |
| business account. | | | | monthly billing statement to see the exact |
| This is why new business owners are advised to | | | | purchases or bills made by your employees. |
| apply for a corporate credit as soon as they | | | | Remember that should your employees abuse |
| launched the business. Upon registration with a | | | | your business account, they will not be the ones |
| business credit bureau, it could take a year or | | | | responsible for payment. As the owner of the |
| two before a business can completely separate | | | | account, your credit card company would come |
| his personal credit history from his corporate | | | | after you for these charges. Keep in mind that |
| credit. Thus, the earlier you start building up your | | | | whether those credit card charges were made |
| credit, the sooner you'll be released from your | | | | with your consent or not, you will still be |
| personal liability. | | | | personally liable to pay. Even worse, your personal |
| Why Use Business Credit Cards with Extreme | | | | credit history can be badly affected if you fail to |
| Caution | | | | keep up with your business credit card payments. |
| Because of the risk, business owners must use | | | | |