A business credit card can help businesses of all sizes and forms. It can help with spending tracking while also providing perks like as business management tools, free employee cards, accounting software integration, and more.
Why not use a credit card to assist your business? Understanding how to choose a business credit card will allow you to choose the best one to make your business spending more profitable.
What to Look For When Choosing a Business Credit Card
With so many alternatives available, deciding on the right business credit card for you might be difficult. Taking the procedures outlined below can assist you in determining which card will provide the most rewards and advantages to meet your company’s demands.
1. COMPREHEND THE BASICS OF BUSINESS CREDIT CARDS
While personal and business credit cards serve the same purpose, there are important distinctions to be made.
Most business credit cards allow owners to open employee credit cards, frequently for free. You can set spending restrictions and track purchases while earning points and other rewards for them. This can also make things easier by eliminating the need to refund employees for personal charges incurred on their own cards.
Do not combine your business and personal expenses. Personal spending should be kept on personal cards, and company spending should be kept on business cards. It will simplify tax preparation and reduce personal liability for business losses.
The Credit CARD Act of 2009 protects consumers who use personal credit cards but not those who use business credit cards. Make sure you pay your bills on time and in full.
You may be required to provide your social security information as well as personal guarantee the business credit card. This means you are personally liable for the remainder if the company fails to pay. Your credit score may also influence the interest rate and card you are qualified for, particularly if you do not already have established business credit.
There are distinctions between a small company and corporate credit cards. Small business credit cards have minimal or no annual fees, employee cards, stronger rewards schemes, and are available to any size firm. Corporate credit cards do not affect personal credit, have higher annual fees and smaller rewards, and are only available to corporations and limited liability companies.
These are only the fundamentals of company credit cards. Weigh the benefits and drawbacks of various business credit cards and assess whether your company is financially solid enough to meet the terms and limitations.
2. EVALUATE YOUR BUSINESS REQUIREMENTS AND TRANSACTIONS
When it comes time to choose a business credit card, the previous six to nine months of expenses might help you reduce down your options. Almost all business credit cards have benefits and perks for certain categories such as travel, retail, restaurants, and petrol. If your company spends the majority of its money in a few categories, there are business credit cards that offer the best rewards for those purchases.
Consider travel rewards business credit cards if you or your staff travel for work. If you have a preference for a specific airline, you can also obtain branded business credit cards that provide additional benefits. If you prefer to travel by automobile rather than plane, there are also petrol cards available for businesses.
Even if your personal credit isn’t in great shape, you may be able to qualify for a rewards business credit card. You might also begin by obtaining a secured company credit card. A deposit is required to start a secured card account, which serves as your credit limit. You can receive your deposit back and increase your credit limit before applying for an unsecured business credit card once you’ve established excellent payment history.
You can also earn points for subscriptions, phone and internet services, and office supplies. There are cards created specifically for startups or new operations, as well as existing firms that require large shipping expenses. If you need to make a major purchase, several credit cards offer 0% APR for a few months to give you enough time to pay it off in full without interest.
You can choose which type of company credit card offers the finest rewards and features for you by evaluating how your firm spends money and what it needs to run.
3. CONSIDER THE BENEFITS AND DANGERS OF AN ANNUAL FEE
While features, bonuses, and incentives are significant considerations when selecting a business credit card, they are not always free. Some company credit cards charge a high annual fee, which may prevent you from applying for the card. However, higher yearly fees are frequently accompanied by larger sign-up bonuses and rewards rates.
You’ll need to conduct some math to see whether the annual charge is worthwhile. Consider how much value you may derive from your company’s expenses in terms of rewards, perks, and bonuses in a year. If the value outweighs the annual charge, it may be worthwhile.
4. HOW TO APPLY ONCE YOU’VE DECIDED ON A BUSINESS CREDIT CARD
It’s time to apply for your company credit card now that you’ve decided on one. Before you start the application, you’ll need to gather the following information:
Name in full
The birthdate; Number of Social Security; The company’s tax identification number; Type of business; Revenue, both annual and forecasted; Monthly expenses
If the business fails to pay, your personal details will serve as a personal guarantee that you will manage all payments. Most credit cards demand strong or exceptional credit, which is defined as a credit score of at least 670, thus your credit score will influence whether or not you are approved. Some corporate credit cards report to personal credit bureaus, so missing payments on one could have an impact on your personal score.
You can start using your card and earning rewards once you’ve been accepted! If you are turned down, you may need to improve your personal or business credit before applying for another business credit card.