India continues to be a hub for the gig economy, with The Hindu Business Line stating that it’s the “second-fastest-growing freelance market” worldwide. And with more and more people choosing to be their own bosses, it’s more important than ever for freelancers to make the right career- and profit-boosting investments. One such investment that can secure their finances and help fuel their growth is a business credit card. But considering that only 100 million Indians currently have credit cards, a lot of freelancers are hesitant about this idea, or simply fail to consider it.
So, why should more freelancers consider applying for their own business credit cards?
It provides fluid cash flow
When you’re a freelancer, you don’t have the safety net of an employer for handling any sudden or unforeseen expenses. This means that more often than not, freelancers dip into their personal savings to make business-related payments. Indeed, Techwire Asia reveals that over one billion Indians turn to debit cards (rather than credit cards) to cover expenses, and in a business situation, this tendency becomes less than ideal. It means draining your personal savings directly, rather than separating professional and private finances. Furthermore, making business payments via credit card allows you to be more flexible covering costs upfront and managing them through repayment in a strategic, gradual fashion.
You’re eligible for cashback and benefits
According to Statista surveys, both credit and debit card users spent roughly 139 thousand Indian rupees between 2018 and 2020. The difference, however, is that those who used credit cards can expect a portion of their money back — plus some bonuses, too. While cashback and bonus schemes vary, some of the credit card perks in India include up to 2% rewards that are redeemable in cash. And depending on the credit card provider and the credit limit established, additional bonuses like travel miles or business-related savings (such as those on utilities or supplies) may be available as well.
It helps you build business credit
If you’re serious about investing in yourself and your business, it’s important to start building business credit as early as possible. With well-established business credit, you become much more attractive to lenders and other investors you may need to scale up in the future. And while the process of building credit on behalf of your business can seem daunting (or just complicated), A post on Petal explains that a credit card dedicated to the business is actually one of the easiest and safest ways to go about it. This is largely because you have the opportunity to set up automated payments, which minimize debt and ensure proper card management. This makes your business appeal reliable and stable, which will, in turn, improve the options you have with the card, and more importantly the business’s credit rating.
Makes taxes and bookkeeping easier
Bookkeeping and filing taxes are complicated enough on the personal front. Naturally, having to manage these processes on behalf of your business only adds to the hassle. With a business credit card though, you’ll at least be saved from the complication of sorting. Your expenses will be separated, starting you off in a much simpler position with business costs all in one place. This streamlined approach is especially helpful if you’re self-employed in a role like one of the 20+ Best Passive Income Ideas we’ve listed in the past. Rather than running the risk of overlooking monetary transactions that may occur while you’re busy with other things, you’ll be able to rest assured that your business card is handling and thus keeping track of everything.
For those who aren’t used to credit cards, the idea of tying your business to an unfamiliar piece of plastic may be intimidating. However, with discipline and understanding, you can quickly turn a business card into an empowering asset for your business, providing all of the benefits above and more.