7 Benefits Of Using A Business Credit Card For Your Small Business
Many business credit cards offer rewards and perks that can help save money. They also make it easier to separate personal and business expenses at tax time.
Often, obtaining a business card is quicker and less of a hassle than getting a loan or line of credit. They can also be useful in building a strong business credit history, which can open up access to other forms of financing.
1. Expense Tracking Tools
Using business credit cards with expense tracking tools, like those provided by Divvy, makes it easier to categorize and track all expenses for your company. This can help simplify expense reimbursements and make tax filing much simpler.
Business credit cards also typically report to business credit bureaus, which may help a small business establish and maintain its own unique business credit scores. This can be helpful if a small business owner wants to qualify for a loan in the future.
In addition to reporting to business credit bureaus, most card issuers provide detailed monthly statements and online tools that can help a small business manager reconcile expenses on a daily basis. These tools can also help separate personal and business expenses when preparing taxes.
2. Access to Funds
Credit cards can provide instant access to funds, which is useful if your business needs to cover expenses right away. In addition, business cards often allow you to add authorized users, giving you the flexibility to control how much each user spends.
Getting a business credit card can help you build up your business’s credit history and boost its chances of being approved for other financing options in the future. That’s because creditors and lenders will look at the company’s credit history when determining whether it is worthy of long-term loans or other funding options.
3. Expense Reimbursement
Business credit cards can be used to simplify expense reimbursements. This can be particularly helpful for small businesses that are structured as a sole proprietorship, partnership, LLC or corporation.
Credit cards can also offer higher credit limits, making it easier to make larger purchases. They can help separate personal and business expenses, reducing the chance of a high credit utilization rate that may hurt a personal credit score.
If you use your card responsibly, it can help build a business credit history that may improve your chances of obtaining affordable business financing in the future. You can also earn rewards, such as cash back or miles, on all your business-related purchases.
4. Tax Benefits
While business loans are an excellent way to infuse capital into your company, small businesses can also benefit from the convenience and value of a business credit card. It can help even out cash flow, make it easier to track expenses, provide purchase protection and offer rewards and other benefits.
Using a business card can also help build a solid business credit history, which can make it easier to secure financing in the future. Additionally, credit card interest is generally tax deductible for business-related purchases. However, it’s important to understand when credit card interest is taxable and how to properly report expenses to avoid paying too much in taxes.
5. Cash Back
Whether you’re looking to earn rewards points, miles or cash back on your business expenses, small-business credit cards offer a variety of benefits. In addition to perks that help track company spending, business cards can also provide access to special financing options for large purchases and keep overhead low with rewards-centric payment terms.
Sole proprietors and freelancers can qualify for many business credit cards, depending on their personal and business credit histories. For those without a business credit history, secured business cards that report to the major credit bureaus may be an excellent option for building up a strong business credit profile that can open up other forms of affordable business financing in the future.
6. Travel Discounts
If your business travels a lot or you’re looking for ways to save money on airfare, hotels and rental cars, consider getting a card with a robust rewards program. Some cards offer bonus points or miles on select categories, such as gas and dining, while others have perks like airline or hotel elite status, free checked bags and lounge access.
Some business credit cards even offer bigger perks than personal cards, such as hefty signup bonuses and lucrative cash back percentages. Check out the features of each option to see if they align with your company’s spending patterns.
Business credit cards offer a number of conveniences that can help small-business owners. Many of these cards allow you to earn rewards like cash back, points or miles on purchases you make for your business and offer online record-keeping tools to simplify bookkeeping. Business cards can also provide more flexible payment terms than other business loan options.
Using a business credit card, as long as you pay your balance on time, can boost your company’s credit rating and may make it easier to qualify for other types of affordable business financing. To find the best business credit card for your needs, shop around and review your personal and business expenses to help you determine what benefits would be most beneficial.