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Should I use my credit card or my client's credit card for groceries?

This was a question that stumped me for a while before starting my personal chef business. I have to admit that it may have even stalled beginning my business as I had no clue how to deal with the groceries and didn't want to show up without some sort of plan.

How do groceries get paid and how much money do I have to save up to accommodate this huge expense? 

I started my business with maybe $500 reserves in my bank account, not likely enough to cover more than two to three client's grocery bills. The average purchase for a family of four when I'm preparing three complete dinners is around $150, more if they order filet mignon and less if they're vegetarian.

While some personal chefs ask for a grocery deposit upfront, I chose to go a different route. With a credit card line of of $1,000 (which is the minimum recommended to start your personal chef business with), I would purchase client groceries and have them reimburse me on the same day. I would then immediately pay the money toward the credit card balance and move on to the next client. Eventually, the credit card company upped my credit line and now my line is $12,500 of which I have never even come close.

Here's a typical credit card transaction and reimbursement cycle:

  • You go to the grocery store today and charge $200
  • Your client reimburses you the $200 the same day
  • Next day, the money your client paid clears and you pay your credit card balance with it
  • It takes 1-2 days for the credit card balance to go back to $0

You can see how you would need at least $1000 credit line if you have multiple clients in one week. If it's an event under twenty people, anticipate $300 to $500 of groceries.

It's important to know, however, that when choosing a credit card, don't just choose any card because it offers a low interest rate. To use a credit card successfully, your plan must be to pay off the balance before it becomes due, so the interest rate isn't important at all. Instead, choose a card with cashback rewards.

For example, I do all my shopping at Whole Foods. Amazon owns Whole Foods and offers 5% cashback on purchases if I use their credit card. Last year, I earned $3500 in cashback. This is free money. I bought groceries, clients reimbursed me for them, and then Amazon rewarded me for it. I don't know of many other credit cards that regularly offer more than 1% or 3% cash back on grocery purchases. If you find a good one with cashback rewards, get it!

It's important to note that this credit card is to be used for business expenses only. Never ever under any circumstance should personal items be purchased with this card. Mixing personal income and business income is called co-mingling and will lead you into heaps of trouble financially. I talk a lot about bookkeeping and how to not accidentally co-mingle personal and business expenses in the Personal Chef Business in 10 Weeks course. If you need help in all aspects of starting your business - pricing, getting leads, bookkeeping, etc. then this is the course you need.





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