Should we be using our business credit card for purchases yet?
My business partner and I have different philosophies on when to use a credit card. She'd like us to use our business card every time we're talking about our business or working on our business at a restaurant or coffee shop. Since we don't yet have any revenue, and I'm much more cautious about credit card spending, I'd like us to use our personal accounts, hold onto our receipts and have our business owe us back that money. It's a pretty divisive issue for us--any advice?
Accruing credit card debt will increase your costs due to finance charges. What I would recommend for you and your partner is making equity contributions or loan the business money to pay the credit card. Utilizing the business credit card keeps a clean division of personal and business expenses for accounting purposes. Then you can just write a business check to pay the credit card bill and avoid finance charges. Once the business has revenue, then it can repay the loan or you can take draws against the investment made in the business if you desire.
Developers and sponsors often have to raise large sums very quickly from multiple sources at a time. To do that efficiently, they typically bundle up all of the information on a given capital raise into an all-in-one-package for investors.
Many entrepreneurs want to go directly to the source the moment an idea strikes or at the first sign of growth, but you need to first prove the business to yourself before asking others to believe in it.