Credit cards can be very useful in business, but they need to be used properly. Are you looking for ways to better manage your company's credit card?
We'll give you some basic principles to follow.
Develop a usage plan
If filing your T2 and CO-17 tax returns is important, so is managing your corporate credit card.
If you want to better manage your credit card, identify what the card will be used for and who will be able to use it.
All employees? Certain key people within the company?
If you don't define how the credit card will be used, you could quickly lose control of the situation. Identify the amounts of money and authorized expenses as well as the employees who will be able to use it.
Use it strictly for business expenses
Some credit cards give you access to loyalty programs. Sometimes it makes sense to use a company credit card for personal use. After all, why not? These cards let you buy a product on credit without charging interest, as long as you pay for the purchase before the statement due date, of course.
However, we recommend that you avoid mixing business and personal expenses. Why? Because it complicates the management of the card, especially if an external accounting service is responsible for checking the statements.
Keep your information confidential and be cautious
Your credit card contains and is linked to several pieces of information that you should keep confidential:
- Your credit card number
- Your personal identification number
- Your verification code (on the back of your credit card)
- Your expiration date
- Your password for online transactions
If you share any of this information with anyone, you could be held responsible for any unauthorized purchases made by that person.
If some of your employees routinely use the company credit card, it may be preferable to provide them with one. This will make it easier to keep track of expenses and prevent information leaks.
Alternatively, you may want to give them access to an expense account.
Keep your receipts and check your statements
Sometimes errors can appear on a credit card statement. To avoid paying for expenses you wouldn't have made, get into the habit of comparing your purchase receipts with your monthly credit card statement. This will ensure that everything is in order.
Try to pay your balance every month
Last but not least, try to pay your balance in full each month as much as possible. Otherwise, you'll accumulate interest and end up paying more for your purchase.
If you can't pay your balance in full, at least try to pay the minimum amount required by your credit card issuer.
Better manage your corporate credit card and protect your financial health
Credit cards are not bad in themselves. All you have to do is use them properly, and you're all set! We hope you find these tips useful and that they help you better manage your company credit card.
Happy shopping!
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
