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A business credit card is designed for small companies that want to separate private from business spending. In addition, you can use a business credit card to easily manage your budget, track business purchases or set employee spending controls.
How do I know if it’s worth getting a business credit card?
To answer this question, here’s what to consider:
You’re mixing business with personal spending.
Business expenses are often tax deductible. But if you’re mixing office supplies purchases with groceries on one card, it may be hard to tell them apart. If this is the case with your business, it may be time to consider getting a business credit card.
You want to earn rewards on business spending.
Some business credit cards reward business-related purchases such as office supplies, advertising, computer services, Internet, gas, travel and more. If you spend a lot money on these categories, you might as well get something back.
You want to simplify bookkeeping.
If your business is growing and you’re providing credit cards to your employees, getting a business credit card will help you streamline your finances, add purchasing limits to employee cards and simplify expense monitoring. All these tools are often a complimentary feature to most business credit cards.
You want to establish business credit.
Looking long term, establishing business credit could be an important step for your future business endeavors. With solid business credit you can get better loan terms should you need money. But to build business credit, you need a business credit card.
Who are business credit cards best for?
Anyone looking to streamline business finances and earn rewards on business purchases, should consider applying for a business credit card.
What are the pros and cons of business credit cards?
Business credit cards can help you manage your company finances, but there are drawbacks to consider.
Simplify bookkeeping. Get separate card statements for your card and your employees’ cards.
Build business credit. Build business credit with responsible card use. This can help you get better loan terms in the future.
Earn rewards on business spending. Earn cash back or points on purchases such as shipping, office supplies, gas or travel.
High credit limit. Get a higher credit line than you would with a personal card.
High signup bonus. Earn a higher signup bonus compared to a personal card. Keep in mind, spend requirements to earn the bonus are also higher.
Personal guarantee. You are personally liable for paying the card’s balance. Luckily, there are credit card options that don’t require a personal guarantee.
May report to personal credit. Some banks report all your business card activity, while others report only delinquencies. This can have a serious impact on your personal finances if your business fails.
If you don’t need to make business-related purchases, or if the amount of those purchases is minuscule, using a personal credit card would likely serve you better. Until your business purchases start to add up to more substantially, you could wait a while until you really need a business card.
Business credit cards can come in handy for smaller businesses that want to separate personal from company spending. Depending on the card, it’s possible to earn rewards on business-related purchases.
If your company revenue grows in the millions and you increase the number of employees, a business credit card may not be enough. In that case, you might want to compare corporate credit cards to find a more suitable option.
Frequently asked questions
When you apply for a business credit card, you need to provide additional information, including annual revenue, monthly spending, number of employees and ownership structure.
It depends on the card provider. Some banks allow you to create your own card design.
Yes, your startup can benefit from a business credit card. But you can check out Brex, which has designed a special card for startups.
Kliment Dukovski is a credit cards writer. He's written over 600 articles to help readers find and compare the best credit cards. Kliment has also written on money transfers, home loans and more. Previously, he ghostwrote guides and articles on foreign exchange, stock market trading and cryptocurrencies.
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