Do you need a business credit card? That is a very important question and one that business owners should consider seriously.
Many business owners, especially small business owners and sole proprietors, use their personal credit cards to make purchases for their business needs. There is nothing illegal about this and if one keeps meticulous records, it can be a way to conduct business purchase via credit card use. However, there are a couple of drawbacks to using personal credit cards for business.
One of the most important drawbacks is record keeping. Generally speaking, most business expenses are tax deductible and, depending on the amount one spends on these expenses, the deductions can be hefty.
By using a business credit card to make your purchases, you can easily keep those expenditures separate from personal expenditures. This can be a great help when tax time rolls around and the business owner has to identify what is personal and what is business. The amount of time that this can save is worth the use of a business card alone. As well, it can greatly reduce mistakes and omissions.
Another good reason to use a business credit card is that it allows the business to establish its own credit history. This can be especially useful for those businesses that are not incorporated. By establishing its own credit history, a business can often find it easier to approach lenders when additional credit is needed. Showing lenders that you have worked hard to get credit for the business and that you have been reliable in paying the credit debt off will go a long way in assuring lenders that your business is a good candidate for additional credit.
Business credit cards can also be useful because of the various perks and programs that they sometimes offer. Personal credit cards also carry several programs but these are most often designed for vacations or consumer type discounts. Business cards, on the other hand, will often promote discounts that are specifically designed to help business owners. These programs can often save the owner a lot of money during the course of a year.
Lastly, you can designate the people or departments that are allowed to use the card. This can save you from having to do this yourself. Again, the savings in time can be worth the effort it takes to get a new business card all by itself.
You can begin researching companies that offer business cards online. As with all types of credit cards, there will be variances between the companies and you will want to make sure that you deal with the company that offers what you need. You will also want to check the interest rates that are being offered and apply for the ones that are the lowest. One tip is companies that offer the most promotions often offer the higher interest rates as well. Be sure you check on that before applying. This can be especially important if you do not plan to use the various perks and promotions throughout the year. You don’t want to pay for something that you won’t use very much.