4 Reasons to Get a Business Credit Card for Your Small Business

credit card

Business credit cards serve many useful purposes to small and large businesses. Even as a sole proprietor of a small business, there’s so much to gain from separating your business finances from your personal finances. Small businesses worldwide are fraught with cash flow issues and financing bottlenecks, use the helpful tips discussed in this article to prevent yourself from falling prey.

As a small business owner, there are several benefits you stand to gain by using business credit cards. This article defines how business credit cards work and what benefits they bring to small businesses.

How Do Business Credit Cards Work?

Business credit cards work like personal credit cards but for businesses. These cards are used to pay for business expenses and the business owner is expected to make necessary payments at the end of each billing cycle.

Unlike personal credit cards, business credit cards have business-related tools to help manage business finances, as well as position the business for better financing options down the road.

Benefits of Business Credit Cards

1.   Manage Business Finances

Business credit cards offer an easy way to manage the cash flow of your business and track expenses. Separating your business card from your personal credit card will help you properly keep track of your business expenses. Also, depending on the business credit card you use, you can get flexible payment options such as minimum payments which make managing your business finances simpler. Having credit cards for your business helps keep track of business expenses, which can be a time-consuming task otherwise. With a business credit card, you have access to detailed statements that help you make better financial decisions for your business.

With credit cards for business, you may be able to access a breakdown of your expenditure by category. For example, you might see your business expenses categorized into “office supplies”, “repairs and maintenance,” and so forth. This breakdown can come in handy if you ever need to do a tax audit.

2.   Build Business Credit

Just like a good payment history helps you build a positive credit score for your personal credit card, the same holds for a business’s credit score. Your business’s creditworthiness determines how much financing your business can access at any given time.

If your business can establish a positive credit history, you would not need personal guarantees to access business financing. Business credit cards when used regularly and responsibly build a positive credit history for your business which sets your business up for financing in the future.

3.   Business-related Perks

Using your personal credit card for your business finances will make you lose out on some serious perks that come with business credit cards. Many business credit cards offer rewards and cash-back programs that might be beneficial to your business. Some business credit cards offer frequent flyer programs, as well as other programs to help businesses access relevant rewards for using their cards.

You may be able to acquire several additional cards for your employees to use on business expenses. This makes it simpler for your staff to conduct business transactions while enabling you to monitor the spending on the various cards. You might also be able to set spending limits for the different business cards to mitigate excessive spending.

4.   Better Terms

Having a credit card tailored to small businesses gives you access to better terms than personal business cards. Some of these terms include higher credit limits, early payment discounts, and lower interest rates.

Choosing the Right Business Credit Cards

There are many business credit card providers available today, so you must do your due diligence to sift out the ones that are best for your business. One of the things to consider before choosing a credit card for your business is its rewards program. You must use a credit card that aligns with your business’s spending habits.

Also, find out if the card requires an annual or other hidden fee. All in all, it’s crucial to do thorough research and find customer reviews of the different credit cards before proceeding.

Elizabeth Barton
Elizabeth Barton
Elizabeth Barton is a writer and digital marketer with over 10 years of experience. I'm passionate about using my skills to help people learn and grow. My blog, The News Columnist, covers a variety of topics, including Business, Finance, and technology and many more. I'm also a regular contributor to several online publications.
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