Small Business Credit Card Usage For Expenses & Revenue
Should you use a credit card for your small business?
It really depends upon your situation. Are you using it because it is convenient? Do you not like carrying your checkbook around? Many businesses actually prefer that you use plastic, as opposed to writing a check, when buying from them. This is fine, as long as you keep tabs on your spending. If left unchecked, you could rack up a large balance in no time. Will you have the reserves to pay off your CC statement? Will you try to obtain a loan to pay off the balance and then end up owing the financial institution, instead? It can be a vicious cycle and it could cause you to shut down your business. However, by using a budget and a fair amount of self-control, your CC can be (and should be) a beneficial tool in your business. Start slow. Sometimes it’s the small steps that will form the healthy money/spending habits. Also, asking for help on how to control your spending habits can help in the short and long term.
Changes to credit card usage in 2015.
Starting October 1, 2015, business that have the EVM (Euro-pay, MasterCard, and Visa) chip enabled terminal(s), will have additional protections from counterfeit credit and debit card fraud. However, each business will have to decide whether or not to invest in the new equipment. For a company that processes a large volume of card transactions, it is really a must. For those that have a relatively small number of card transactions, you will want to weigh the cost of the new equipment against the risk of not getting the new equipment. However, if you do not, your business could become legally and financially responsible for counterfeit and fraud conducted in your stores. With this technology in place, your business will still need to be PCI-compliant under payment card industry regulations. If you have a data breach and it is due to the lack of compliance with the EMV and PCI standards, your business could also face fines, penalties, and termination of the right to accept card payments. There is still time to decide on how you would like to proceed, but now is the time to start talking about it.
-Michael Hermanson, CPA | CGMA