There's no doubt that working as a freelancer poses unique challenges. There are matters of receiving health and retirement benefits to establishing a work-life balance to even having the discipline to work independently. Finances shouldn't be one of those challenges.
When I was first starting out, I assumed that I would have to fund everything myself - and that led to using personal credit cards to do it. The line between my business and personal life blurred. It quickly got confusing and stressful trying to separate the two. I found a solution by using a business credit card and the rest is history.
Here are six reasons why you should use a business credit card if you're self-employed.
1. Taxes will be much easier.
Working out your taxes as a freelancer can be a headache inducing experience (to say the least). With the use of a business credit card, you can use the statements to conveniently prepare your tax forms. This method beats spending hours going over all of your statements and receipts from the year, trying to figure out if that trip to the store was for supplies or for groceries.
If you use an accountant, consider how much you pay them by the hour. You can save money by using a business credit card instead of paying them for hours of rummaging through your personal credit card history. Whether you do your own taxes or hire an accountant, it's worth it to keep things separate.
2. Take charge of your finances.
A business credit card isn't only helpful come April 15th. Business credit cards are also valuable year round because it allows you to analyze your spending. You can create a budget much easier and quicker instead of going through nondescript bank statements. Plus, you'll have added protection should your account get hacked or card get stolen.
3. You'll have a backup for any unexpected opportunities.
Let's say an opportunity for growth gets presented and you have to move quickly, otherwise the opportunity will go to someone else. Business for the self-employed isn't always consistent so having an alternate financial source can be a relief. Plus, a business credit card usually has higher spending limits than a personal one.
When I was first starting out, I had a last-minute opportunity to attend a workshop that was going to be beneficial. This workshop was an opportunity to build relationships and get one on one feedback on my business from a few people that I wanted to be mentors. I was able to attend this life-changing workshop thanks to my business card.
4. Build business credit.
Building your credit as a business is a smart idea. By doing this, you'll give yourself a better chance of getting a quality business loan. Note that a business credit score is different to a personal credit score. Having good business credit can show lenders that you are serious about your business and aren't a risk to them. This is a win for future opportunities.
5. If you grow, you'll have a way to share with your employees.
With many jobs moving towards the unconventional, the likelihood that you will work with other people who are also freelancing or self-employed is high. Perhaps you'll find a partnership with a colleague beneficial. Maybe you're better at communications while they're better at design.
Should you decide to work together or even if you prefer to hire contractors, you can provide access to your finances by getting them a card in their own name. It'll be easier to manage and you don't have to worry about lending out your own card. Plus you'll have legal protection, especially if you've established yourself as an LLC (Limited Liability Corporation).
6. You'll earn points.
One of the fun benefits of using a business credit card is the perks, points, and rewards that come with it. For instance, a Forbes survey of the best business credit cards found that you can earn over $1000 in travel for opening an account and meeting the required spend. You are spending that money anyways so you may as well get something out of it.
I've personally used credit cards rewards for many travels and travel upgrades. I've shared rewards with my family so that they can see what I see. I've even used it to go to exclusive events like the Emmy Awards and the US Open. All of this thanks to a little piece of plastic.