We live in a cashless society in which debit and credit cards rule. When was the last time you paid for goods or services with cash or even a check? It’s probably been awhile. As important as it is to have access to credit as a consumer, it’s even more vital as a small business owner. There are many benefits to getting a small business credit card, especially as your business begins to grow and thrive. Here are the most important reasons to consider applying for a business credit card.
#1. Establish business credit
Most business owners use their personal credit rating initially in a new business venture, but it pays to establish business credit as soon as possible. A small business credit card allows you to establish a separate credit history for your business that can help obtain business loans, vendor contracts, and distribution contracts.
#2. Separate business and personal finances
If you have a limited liability company (LLC) or an S-corporation, it’s essential to take steps to treat your business as a separate entity. This means your personal finances and business finances shouldn’t be mixed to maintain your limited liability protection. If your business and personal finances are mixed, you may lose the legal protection you gained by forming an LLC or incorporating. A business credit card can also help you with record keeping for your taxes by keeping business expenses organized.
#3. Many forms of protection
A business credit card comes with many forms of valuable protection above and beyond a debit card. Depending on the card, you can enjoy:
- Fraud protection. You aren’t liable for fraudulent purchases
- Rental car insurance. You’ll save money at the car rental counter, by refusing the expensive collision damage waiver coverage from the rental car agency
- Price protection. Some cards offer a service to reimburse you the difference in price on eligible items purchased with your credit card if the price drops within a specific period of time
- Purchase protection. This service protects you if your purchased item was not provided, damaged, stolen, or lost within a specific amount of time
- Extended warranties, Often the card will extend your warranties for your business purchases
#4. Track and manage employee spending
If you have employees with spending privileges, a small business card can allow your employees to make purchases on behalf of the company. Most business credit cards allow you to order employee cards with spending limits you control and reports to help you track spending. You can even set up alerts to know when and how employees are using their cards and earn rewards faster across all employee cards.
#5. Earn significant rewards
Business cards usually have better rewards than personal credit cards, especially when it comes to common business categories like office supplies, cell phone service, travel, and gasoline. Look for a business card tailored to the needs of your business.
#6. Improve cash flow
A business credit card can help you improve cash flow, especially when your business is getting off the ground or struggling with slow paying customers. A credit card can help when income slows down, invoices are overdue, or you have important business expenses without free capital.
About the author:
Ryan Bridges is a contributing writer and media specialist for the Financial Business Solutions, Inc. He regularly produces content for a variety of business and finance blogs, based around the transitional challenges which comes with managing businesses and financing.