Having the right business credit card will help make all forms of business expenses simpler to track. One can also separate them from that of their personal expenses. Take a look at the different reasons why one should consider using it.
Why Use a Business Credit Card?
While growing up, the idea concerning a business for many people probably was the organization their parents worked at or their favourite neighbourhood store. Yet these days, it is like just anyone can own business despite it being merely a side hustle. Today’s connected economy indeed makes it simpler for anyone to begin a new business. However in case of filing taxes and accounting, people need to play by every old rule which dates back decades. The best credit card thankfully can make it easier for business expenses management.
How Do These Cards work?
The majority of the credit card providers offer credit cards that are designed exclusively for small business owners. To qualify for this card one has to operate a business and of any size. Take for instance one can offer their expertise as a freelance consultant, run a dog-walking service or re-sell goods online. They do not even require incorporating. They can operate an LLC (Limited Liability Corporation), have a partnership or be the sole proprietor. To apply for this card, one must supply their personal income as is done with a personal credit card. That is owing to the fact that these cards require personal repayment guarantee just like their other credit cards.
Benefits in Abundance
When you add the right business credit card in your wallet, they will instantly have a means of separating their business expenses and personal transactions. But apart from this it offers much more so let’s check it out,
- Rewards for the Business- These cards can provide the user rewards which may be highly suited to their business purchases compared to their personal purchases. The Business Advantage Cash Rewards Mastercard issued by the Bank of America, for instance, provides a cashback of 3% for purchases both at gas stations and office supply stores. This rate is higher compared to what other cards offer, hence if one’s business needs enough office supply purchases it will be an excellent means to save. Not only this, but this card also offers cash back of 2% at restaurants while 1% elsewhere.
- Track Expenses- This card comes with higher reporting and tracking features. The Spark Cash for Business Card from Capital One, for instance, provides year-end, and quarterly summaries and one can create itemized, custom report of their spending. It aids one when they require planning their business, creating a budget and filing their taxes. Besides, it provides cash back of 2% on every purchase and with no limits.
- Financing the Business- These cards can provide one with a way to fund their business. Adding it will give them an increased purchasing power that is beyond their personal credit card. Besides, it can also provide new accounts, in fact, interest-free financing that they may require in getting their business correctly off the ground. Once this expires, the user can continue using the card for financing purchases. However they should never carry any balance for an extended period. After all, they will be responsible personally for repayment despite deciding in closing the business down.
- Convenience- A good thing about using these cards is one will be capable of accessing funds easily irrespective of where they are. They will not require carrying vast amounts of money or checkbooks as it is more convenient and easier in making online purchases or withdrawing cash.
- Easy Application of Loans- When a business person tries to apply for a loan without any collateral they know how strenuous the process is mainly when they do not possess a good credit reputation. Here a credit card will be a far better choice in comparison to traditional financiers as it does not require them to offer collateral before getting the credit. They can qualify for funds easily despite not having a good credit history. Here lies a good reason why small businesses must make the most of this card.
- Financial Protection- Often a business may face periods where sales may be low, and they are short on cash. But if a business owner has a good business credit card, they will be capable of accessing funds for running the business thereby serving for the business as the temporary financial cushion. Such cards will provide them with more spending power thus allowing them in running their business uninterrupted during difficult economic times as well.
- Build Credit Reputation- No matter one wishes to repair their damaged credit history or build a strong credit reputation, these cards will aid them in doing this. Such cards are different from personal credit cards while the rates of interest that they will receive from financiers will rest on how much creditworthy one is depending on their business credit history. If they have applied for any loan and paid the same without faults consistently, they are likely to build a strong credit rapport. They can access funds at low rates of interest while applying for big loans later on.
- Purchase Protection and Insurance- Applying for the right insured business credit card will provide one purchase protection for free for a certain period. It means they will get compensated if the product they purchase gets lost or stolen within a definite period. Though this insurance and protection are not that high, it will at least protect the business owner and his business from fraud on purchases.
- Sole Means to Pay- Some businesses are completely cashless and accept only credit cards for payments. The right business credit card indeed will allow one in acquiring services or making purchases from such businesses easily through the credit card.
Every small business owner should discover tools which will best help them in making profits and growing their company. The business credit cards indeed is a smart means of helping one in managing their business and earn some rewards.