When Should You Consider Getting A Business Credit Card For Your Business?


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When do you need a business credit card?

In theory, you can usually get a business credit card immediately. This is a great way to keep your business and personal expenses separate, which you should always do. Failing to do so in certain cases could cause you financial or legal trouble in certain cases.

How can business cards help your business grow?

Business credit cards can help build your credit

If you’re looking to build a credit history for your business so you can eventually take out larger loans without a personal guarantee, a small business credit card is a good first step toward building your business’s credit. Business credit cards help your business build its credit file, so it is imperative you make on-time payments and keep your debt under control.

Business credit cards can help you manage your money

You can also use small business credit cards to help you manage your bookkeeping. If you put all of your expenses on a business credit card, you’ll know exactly how much money your business spent by simply logging into your credit card account.

Whether you outsource your accounting to a bookkeeper or manage your books yourself, having all of your expenses in one place makes it easy to gather information for taxes, loan documents and financial statements.

You can earn rewards with a business credit card

Another great reason to get a business credit card is to earn credit card rewards.

As long as you pay your credit card bill off in full each month, it’s easy to earn at least two percent cash back on all of your business purchases. Two percent cash back isn’t a life-changing amount but it is extra cash you can use to help grow your business.

What to watch out for with small business credit cards

High fees

Like with any credit card, small business credit cards can come with expensive interest charges and fees. Do not get a small business credit card if you can’t afford to pay your balance off in full each month or cannot afford to make the interest payments on the balances you’ll carry.

While a small business credit card may seem like an opportunity to help you get your business on its feet or through a tough time, they can also result in nasty debts. Make sure you have a realistic plan to pay the debt off before incurring credit card debt.

Business cards don’t offer the same protection

You should be aware that the rules that govern business credit cards aren’t the same as the rules that govern personal credit cards. Personal credit cards typically provide more protection such as benefits under the Credit CARD Act of 2009.

Business credit card issuers may offer these personal credit card benefits to business credit card customers but they aren’t required to.

Summary

Getting a business credit card should be synonymous with opening a business. They can help you earn rewards and establish a credit history for your business.

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