Friday, February 15, 2013

Credit Cards for Business Expenses

Generally I'm not a big fan of credit cards. For personal use I don't even have a credit card--just a debit card. But for business, I really like my American Express.

Before I go on I want to make clear a few things:

  • I don't use my AmX to get extra time to pay bills
  • I NEVER carry a balance (my AmX is a charge card so the entire amount is due monthly)
  • I do not purchase anything that we don't have the cash to pay for
So don't take this post as an endorsement of carrying a balance on a credit card, buying things you can't afford, or trying to buy a little more time on your bills.

I have two separate cards. One of them I use only for subscription-based items. For example, that card gets the recurring monthly charges from Demandforce, Quickbooks Online, Dropbox, Hostgator, New York Times, AT&T Wireless, Vocalocity and quite a few more. I never use this card for miscellaneous online purchases or in-store swiped transactions.

My other card is used for everything else. Travel expenses, swiped purchases in stores, online purchases, and it's the card on file for some of our supply houses.

I started separating the transactions on different cards last year after I had to cancel my card for the second time in 6 months due to fraudulent activity. Having to make all those phone calls and log into the multiple accounts that were auto-charging the card took hours! I'm guessing it's the other transactions that put my card at risk for fraud, so by having those on a separate card I limit the work if I have another issue.

One thing I love about this set-up is the way it streamlines the bookkeeping. I use Quickbooks and have the American Express cards linked through online banking. Since a lot of the charges are recurring items that do not change month-to-month I have set those up in Quickbooks as recurring credit card charges. Quickbooks will automatically create the charge. When the AmX transactions are downloaded, QB matches them up. I just click "accept." For transactions that don't have a match Quickbooks suggests how to code them based on past transactions. I make adjustments as necessary and click "accept" and the expense is recorded. When it's time to pay the bill I log into AmX's website and set up an online payment. Easy peasy. Since I figured out how to do all this in Quickbooks it's saved me a ton of time. I have far fewer vendors to pay individually and AmX provides nice spending reports available online.

Do not use this process if you have problems with over-spending. It would be like giving an alcoholic a drink. But if you are a person who uses credit responsibly, who can afford everything you are charging, and will pay the bill on time every time, it may work for you too.

If you'd like a post that goes into more detail on how to set this up in Quickbooks, leave a comment. I didn't want to get off on a tangent here!


  1. Just discovered your amazing blog. Yes, please more details. I just opened the first week of January, and even though there are only two chairs currently, we will quickly be expanding to four, and then the 3-5 year plan includes launching into a 15 chair salon. I would really like to have all systems in place before even bringing the other two people in. If you'd like instead of writing an entire blog just for me you can just email me. I've never commented before so I'm not sure how this will work, so bear with me as I figure out how to do this! Thank you!

    1. Hey Taylor, congratulations on your new business! Cash flow is king so if you have not set up an accounting system yet, it should be one of your top priorities! I will work up a post with some basics but you may want to google "quickbooks expert" and see if you can find a local bookkeeper to help get you started. I also love online banking. I check the balance every day so I know where we stand.

      Honestly, I don't know how to move our conversation off the blog without publishing our personal emails, but if you put yours in a comment, I will send you an email and delete the comment promptly for your privacy.

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