Welcome to our world where big dreams come in small packages! If you’re just starting your exciting journey of turning your passion into profit, then you’re in the right place. Let’s navigate this entrepreneurial ocean together.

Here’s a little background, we started our first legit small business Eden Body Care | Goat Milk Soap and Natural Skincare in 2019 where we sell handmade goat milk soaps and skincare products. We started this because we, ourselves had skin issues and looked into how goat milk soap can really help with eczema, and dry/sensitive skin and since we already had the goats at our homestead, we figured what the heck. Let’s give it a shot!
Here’s a throwback to the very first picture of us making our first loaf of soap! 

We are now in 2023, 4 years of small business experience and we have never opened a business credit card account to purchase anything for our business, we’ve kept our business debt free and always used our own money to fund the business. In the last year, we did apply to a small net30 account with Uline just to help start building credit in our Business’ name. We do plan on acquiring a few more net30 accounts in the future, but for now, we have 1 account.

Then we started this new blog Hai Path, which we still have not acquired a credit card account and don’t plan to.

My Husband and I have personal credit cards, which we use for personal/home/grocery purchases, and pay off right away so it doesn’t generate interest. We are the type of people that does not like to acquire debt as much as possible but that being said, having good credit is a plus when living in this world.

Should I Get A Credit Card For My Small Business?

As a small business owner, you need to ask yourself:

1. What are you trying to purchase for your business?
2. Can you guarantee you can make the income to pay off this debt, essentially within a time frame?
3. Do you really need a credit card to make this purchase or can you just purchase it without putting it on a credit card?

Here are some points to consider also:

Advantages of having a Business Credit Card:

1. Building Business Credit: Having a credit card in the name of your business can help establish a business credit history. This can be beneficial when seeking additional funding or loans in the future.
2. Separating Personal and Business Expenses: It’s crucial for businesses, especially small businesses, to separate personal and business expenses for tax and accounting purposes. A business credit card can make this easier.
3. Expense Tracking: Many business credit cards offer expense tracking tools. These can help small businesses monitor their spending, categorize expenses, and even generate year-end summaries.
4. Rewards and Perks: Business credit cards often come with rewards programs, like cash back or travel rewards, and perks like insurance, extended warranties, and more.
5. Cash Flow Management: Credit cards can provide a short-term “loan” when you need to make purchases but don’t have the cash on hand. This can be beneficial for managing cash flow.

Disadvantages of having a Business Credit Card:

1. Risk of Overspending: If not managed carefully, it can be easy to rack up debt on a business credit card and you can end up in a bad hole if you find you cannot pay it back.
2. Potential Impact on Personal Credit: Some card issuers report business credit card activity to consumer credit bureaus. If the business accrues debt or misses payments, the owner’s personal credit could be affected.
3. High-Interest Rates and Fees: Business credit cards often come with high-interest rates and numerous fees. Small businesses need to be aware of these costs.
4. Legal Liability: In many cases, small business owners are personally liable for the debt on their business credit cards. This means if the business can’t pay its debts, the owner may be personally responsible.

What types of businesses should consider a credit card:

1. Businesses with Regular Travel or Client Entertainment: Businesses that require frequent travel or client entertainment are likely to benefit from a business credit card. Many credit cards offer rewards like airline miles, hotel points, or cash back on dining and entertainment expenses, making these necessary business costs more rewarding.
2. Businesses with Fluctuating Cash Flow: If your business has seasonal highs and lows or fluctuating cash flow, a credit card can help manage short-term financial gaps.
3. Businesses with Employees Making Purchases: If you have employees who need to make purchases on behalf of the business, having a business credit card can make this process more streamlined. Plus, it reduces the need for reimbursements.

In my humble opinion, when you’re first starting out it’s best you don’t acquire a credit card – This is coming from a person that does not like to acquire any type of debt.

In assessing whether your small business requires a credit card, a good starting point might be to consider the size of your operation and its income. If your annual turnover is within the range of $10,000 to $50,000, it’s possible that a credit card might not be necessary.

However, certain circumstances could change this. If your business needs to purchase inventory or materials ahead of a busy season, and you’re confident that you can recoup these expenses and repay your credit card balance timely, then obtaining a card could be a beneficial move.

Establishing credit for your business is indeed advantageous, but a business credit card isn’t the only way to achieve this. You should be cautious to avoid becoming too reliant on a credit card, as it could lead to overspending beyond your capacity to repay.

Ultimately, the decision to acquire a business credit card should depend on various factors. These include the size and stage of your business, the nature of your operations, and your specific reasons for considering a credit card.

Remember, as the captain of your entrepreneurial ship, you have the best insight into your business’s needs. Therefore, the decision lies in your hands – choose what’s best for your business.

I hope this post was helpful in breaking down the reasons why you should or should not get a credit card for your small business!

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