Whether you need funding for your business or you want to earn money back on your business expenses through reward offers, a business credit card is an excellent choice. Business credit cards come with several advantages over personal credit cards.
Card issuers realize that business owners usually spend more money per month than consumers, and they adjust the credit limits on their business credit cards accordingly. When you’re approved for a business credit card, you can anticipate a higher credit limit than you would have with a personal card.
Keep Track of Your Business Expenses
Anyone who has spent tax time going through old credit card bills trying to figure out what was a personal expense and what was business-related knows how important it is to keep expenses separate. The easiest way to do so is by having a business credit card that you only use for your business expenses. All you have to do is check your total spending on that card for the year to determine your business expenses, and you’ll have your financial records readily available in case of an audit.
Reward or Cash Back Offers
It’s a crowded credit card marketplace, which is beneficial for business owners and consumers because card issuers are constantly trying to outdo each other with their reward offers. There are two types of business credit cards: reward cards and cash back cards.
As you’d expect, cash back cards earn money back. The cash back you earn either gets taken off your bill every month, or you can request when you want it back. Keep in mind that cash back is also an option with reward cards.
Cards typically include a sign-up bonus offer that you get by hitting certain spending minimums within a designated time frame. For a cash back card, you may earn $300 cash back if you fulfill the terms of a sign-up offer. With a rewards card, you could earn 50,000 reward points or more, depending on the card.
Rewards and cash back allow you to get something back from the money you’re spending anyway. Certain cards provide extra points on specific types of purchases. For example, the Chase Ink Business Preferred credit card earns three points per dollar spent on travel. Look for a card that has special offers related to your usual spending categories to get the most points or cash back.
Improve Your Business’s Credit Score
Your business’s credit score is separate from your personal credit score, and tying a business credit card to your business is an excellent way to boost its score. Make sure that you pay your bill on time so you can maintain a high business credit score. By building your business’s credit, you’ll have better luck if you need a business loan in the future.
If you have employees that make purchases for your business, one of the most convenient options is providing them with their own card copies tied to your business credit card account. Of course, it’s important that you only provide cards to employees that you can trust. You can also set limits on those card copies to provide some protection against excessive spending.
Track Your Spending
Business credit cards typically have more advanced and detailed expense reports than personal credit cards. Using these reports, you can analyze your business’s transactions and see where your money is going every month. This makes it easier to develop a budget for your business.
The many benefits of business credit cards make them a smart choice for any business owner. Even simply putting all your expenses on your business credit card and paying the balance off every month can earn you big rewards or cash back. Look at all the available options to find one that best fits your needs, whether you’re for the best reward offers or a low interest rate.