Page 50 - 597 Business Ideas You can Start from Home - doing what you LOVE! (Beginner Internet Marketing Series)

Step 3. Bootstrapping: Make the Most of You r Own Resources 39

Pros of Using Credit Cards

The main benefit of using credit cards to finance your venture is
simply that it's the easiest money to obtain. They're easy to use, and

are sometimes your only choice. Even with the credit crisis, they

are readily available and, unlike investors or family members, they
don't ask questions.

Credit cards are helpful for tax purposes as well. You have a
record of your business expenses on your statement for tax write
offs/deductions. In fact American Express Business cards generally
will send you a quarterly breakdown of your charges so that you can
analyze your expenses and have the list handy for your accountant.
You never want to pay cash for a business expense; always have
a record of the transaction. Your accountant will explain which
expenses are tax deductible and can be used to offset losses on your
annual tax return.

Cons of Using Credit Cards

Credit card usage can become a slippery slope, so you do need
to be careful. Here are two major pitfalls.

l. High interest rates. The costs associated with high interest
rates add up quickly, especially if you regularly only pay the
small monthly amount due. You can get away with paying
the small monthly amount due for only a few months­
after that, you need to pay more if you want to chip away at
the growing debt. If you charge a lot on the credit card and
don't pay more than the minimum due every month, each
subsequent charge will actually cost you a lot more than
the original amount you charged. This is because you are
paying the high interest rate on the accumulation of your
unpaid balance. Multiply every purchase by your inter­

est rate, add on that amount, and that's what you're really

paying.