Credit cards – the accounting savior for small businesses
Credit cards are often seen as a necessary evil – a must-have tool for booking airline tickets, purchasing items on the internet and maintaining a consistent day-to-day lifestyle when you get paid every two weeks or month. However, it also has innate benefits that can help with budgeting, tracking expenses, separating finances and all other integral accounting functions. Today, we’ll look at five ways credit cards make accounting easier.
- Tracking employee expenses Purchase orders make paperwork confusing, and the need to pre-approve expenses can delay business processes and create missed opportunities. However, issuing cards to employees who are authorized to incur expenses on behalf of the company is a simple, centralized way to track purchases for your Melbourne accounting department and ensure that expenses are itemized. If some employers are concerned about the possibility of misuse, simply request a separate statement for each credit card holder. It is the responsibility of each employee to ensure that the card data is secure; and with monthly statements, it is only a matter of time before inappropriate spending is discovered.
- Separate business and personal expenses For small business owners, your personal life is often closely tied to your business life – you probably answer phone calls at home, respond to emails on the weekends, work late at night, and bring small items from home to the office. However, mixing your personal and business expenses is a recipe for headaches, both for weekly bookkeeping and for quarterly BAS statements and year-end tax returns. Use two different cards for your personal and business expenses, and you can easily separate the accounts. Many companies even offer customizable card faces – you can put your family’s face on one card and the company logo on the other!
- Speed up checkbook reconciliation Checkbook reconciliation is one of the most time-consuming aspects of accounting. You can make it easier on yourself and your employees, or save money on your Melbourne accounting department, by using one credit card for expenses and writing one check to cover the payment at the end of the month.
- Credit card rewards Credit card rewards systems are generally designed for household spending, making it difficult to actually redeem rewards. However, business spending is usually much higher than household spending….. and with the help of a specialized accounting service in Melbourne, you can ensure that your credit card debt is paid on time each month. This way, you can reap rewards without being burdened with interest payments.
- Customizable Reports Sometimes you come across a credit card provider whose online banking services allow you to create a number of custom reports for your credit cards. If you need to enter some type of data into MYOB or QuickBooks for accounting purposes, it is much faster to have all transactions sorted and printed for data entry.
Credit cards are something households and businesses should be wary of, but they have innate benefits and are certainly not a necessary evil to endure!