Business Credit Cards: Why Your Small Business Should Have One

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• 3 minute read

If you’ve been using your personal credit card for business use, it’s time to take a look at how a business credit card can benefit your small business, and make your life easier. Don’t think of adding a business credit card as one more task on your list; think of it as opening up a whole new world of benefits for your business.

Simplify Tax Preparation

Nobody wants to complicate tax preparation, but charging business expenses to your personal credit card does just that. Now you–or your accountant–will have to go through your statements to separate business purchases from personal ones.

There’s a real chance of making a mistake, one way or another; you might miss valid business expenses, which costs you money. Or you might accidentally claim personal expenses, and flag your business for an audit. By opening a business credit card and using it for your business expenses, you make tax preparation simpler and easier. Your accountant will thank you.

Keep Track of Business Expenses

Speaking of business expenses, do you know how much you spent on donuts for the staff, or cleaning supplies, or vehicle maintenance last year? If you’re a stickler about keeping your receipts sorted and organized, you can add them up for an accurate view of your business expenses. But what if you miss one? Or many?

Using a business credit card to pay for all your variable business expenses makes it easy for your to track how much you’re spending on each one. Most major credit card companies offer online, searchable statements, so you can search for particular expenses, keep track of your spending by category or quarter. Many also allow you to order more than one card per account, which means you can give one to your office manager, for example, instead of collating many accounts or stockpiling receipts for petty cash. In addition to helping you organize, this clean data will help you predict what you’ll need for better budgeting in the future.

Manage Cash Flow

Being able to estimate accurately what you’ll need for variable business expenses makes it much easier to manage your cash flow. The ability to use a business credit card to handle those big expenses, and spread payments out over multiple months, can help you avoid a cash-flow crunch.

When the hot water heater gives out in your slowest season, you don’t have to choose between repairing it or paying your employees. You can use your business credit card to pay the repair bill, and then knock out your credit card balance as you’re able to over the next several months. Your purchasing department may even find a card to use for smaller orders, which means fewer POs to do and not as many checks to write.

Enjoy Business Perks

Business credit cards offer a host of perks for small businesses. While your personal credit card might have a rewards program, business credit cards generally try to offer perks that are directed specifically to business needs. Perks might include airline points, gas and hotel discounts, and extra points gained when you use the card for office, cellphone, or Internet service expenses.

Build Business Credit

A business credit card, used wisely and paid regularly, will help you build business credit. Good business credit is imperative when you decide it’s time to expand, add another product line, do those major repairs, or otherwise build your business. The better your business credit, the more options you have for funding those business improvements with loans.

When choosing a business credit card, look for clear explanation of interest rates, payment windows, and fees. Business credit cards aren’t always subject to the same stringent requirements as personal credit cards, so  shop around to find the best offer for your business needs. Then use your business credit card to keep your business finances in order, simplify your taxes, and benefit from those business card perks.