Business Credit Cards – Small-business owners are often tempted to use a personal credit card when buying goods and services for their business.
Sure, it provides a quick infusion of cash, but an entrepreneur should consider applying for and using a business credit card for the company’s needs.
Business Credit Cards
“Business credit cards often offer a number of benefits beyond simply paying your business expenses,” said Pamela Codispoti, president of Chase Branded Cards. “Whether it’s maximizing your rewards earning power in business categories or accessing reporting tools to help build your business credit score, business owners should take advantage of these unique benefits.”
Here are five reasons why:
Build your business credit
By using your business credit card and diligently paying it off, you’ll build a history that will make banks increasingly willing to lend to your business at a reasonable interest rate.
In fact, the lack of business credit history is one of the biggest hurdles for small-business owners seeking a line of credit to expand.
Some business credit cards also offer reporting tools that help create a presentation asking a bank for additional financing.
Also, co-mingling your personal and business expenses could undermine the legal protection you created by incorporating your business or organizing it under a limited liability company.
Separate expenses and simplify accounting
“It’s best to maintain separation between your personal and business expenses and finances,” said Codispoti. “You can run your business more efficiently by having distinct accounts, cards, and bookkeeping.”
Who wants to sift through receipt after receipt at tax time, trying to recollect where, how much, and why you spent your money over the last year? You won’t have to if you used a business card exclusively for your company’s expenses.
Some business credit cards also do a lot of the record-keeping for you, and you often can access it from your smartphone. Check out those capabilities when shopping for a card.
Earn and reinvest rewards in your business
Find out if your business credit card offers rewards. Then put them back into your business — for travel, lodging and even creative marketing.
Rich Mendoza used the 60,000 points he earned from his Chase Ink business card to create a giant mustache of shrubs for the front of his Filthy Rich Barbershop in New York City.
David and Emily Ojobaro tapped their 60,000 points to create a pop-up DIY juice bar to market Squeezed Online, their cold-press juice company.
“Small-business owners can use business credit cards as a financial tool, reinvesting their perks and rewards to power their business needs,” Codispoti added.
Make it easier for your employees
Providing your employees with a business credit card gives them the autonomy to operate effectively while keeping their spending in check. There’s often no extra cost for the extra cards, which can help you accumulate additional points through the purchases.
“With a business credit card, business owners gain access to business-specific benefits, such as employee cards and spending controls, and specialty services tailored to meet their needs, said Jeff Berry, editor-in-chief of Colloquy, publishing, research, and education practice.
Enjoy the same level of protection
Consumers love the protection that comes with a personal credit card, including when charges are waived when a card is lost, stolen or used fraudulently, and purchases are insured against damage or theft.
Some business cards provide the same protections — and peace of mind — to cardholders.
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