Business debit and credit cards - pros and cons

Using credit and debit cards for your business saves the inconvenience of a chequebook and the risk of cash.

As well as owners, employees can also be issued with credit and debit cards, the spending limits for which can be set by the owner.

There are a number of card providers. The terms and conditions and, in the case of credit cards, the interest charged on any outstanding balances can vary.

As with all forms of finance there are both pros and cons to using cards instead of cheques or cash to make business payments.

Cards offer a greater degree of flexibility; for example, they can be used on the phone and online as well as for 'in person' transactions. There is also a certain amount of free credit: the outstanding amount on credit cards does not have to be settled until the end of a set period (usually a month, although sometimes longer depending on the provider). Since most are recognised across the world, they can be used on overseas business trips.

They can be a source of immediate cash withdrawals (but credit card providers will probably charge interest on the cash from the day on which it is withdrawn).

They also involve slightly less administrative work. Irrespective of the number of individual purchases for which a card is used, there is only a single statement to be settled at the end of each month. That statement can similarly help simplify record keeping of business expenditure.

On the downside, the major problem is debt and interest payment. Credit cards that are not paid off in full by the end of the stipulated 'credit-free period' will automatically trigger an interest charge of varying amounts. Not only is this an expensive way of borrowing money, it runs the risk of tempting a business to overspend. Cards are also open to fraud.

Business owners must be likewise careful to ensure that any employees issued with cards do not make inappropriate or unauthorised purchases. To counter the problems of unnecessary purchases it may be useful to set up a check system that controls the sort of transactions that employees can make.

Easy Accountancy

Easy Accountancy is the UK’s only national specialist accountancy firm for freelancers, sole traders and small businesses

If you’ve just started out as a freelancer or run a small business, you’ll definitely need a small accountant and there are plenty of options out there! However, most accountants will charge you every time you get in touch with them; for every phone call, email or meeting.

We don’t want our clients to be scared to contact us and potentially lose out on valuable tax saving advice. It's even more important when you first start out as you really need to set your business up in the best way possible. As a start up you’ll probably have loads of questions and will really appreciate the fact you can call your accountant as many times as you like without the fear of racking up large bills.

Our low cost, all-inclusive fixed-fee accountancy service includes unlimited access to your own accountant throughout the year, so you never need to worry about picking up the phone and then receiving a bill afterwards for the privilege, and covers all your business and personal tax affairs needs. All clients additionally receive:

Help to run your business in the most tax efficient way possible
Help so you can understand the taxes you need to pay
Advice on the best ways to manage your business
Updates and reminders so you'll never miss a deadline
Help to ensure you maximise your tax allowances
Provide proactive tax advice throughout the year

We’ve saved our clients up to half on their accountancy bills – if you’d like a quote, click on the quote me button to the right of this page. Alternatively, call us on 0500 234111 / 01442 275767 or email jessica@easyaccountancy.co.uk

We also have a money-back service guarantee - all of your telephone calls and emails will be answered on the same day, or we will refund your monthly fee (another first within the accountancy world).

To appoint us as your accountants, please fill in our Client Agreement Form online.

If you are a contractor working through a limited company then visit SJD Accountancy (our sister company) who specialise in providing tax advice and accountancy services for Limited Company contractors. You can also keep up to date by following the SJD Accountancy Twitter

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