If you already have one or more personal credit cards, you might wonder why you need a business credit card as well. Whether you are a proprietor or even a freelance professional, there are several advantages to getting a business credit card. Many small businesses use the card as a means of financing but there are other reasons as well as to why it might be a good idea.
Higher credit limit on a business card
Since a business card has a higher limit than an regular individual card, many proprietors use the card as a source of funds to keep the business running. This is an especially convenient option when it is too time-consuming, expensive or just difficult to get a loan from a bank or other lender. Using your business credit card can help you take care of working capital expenses in the quickest and most seamless way.
Benefits tailored to business needs
A regular credit card can offer benefits like movie vouchers or gifts or even complimentary golf that may not be relevant to your business needs. A business credit card has customised benefits like cash back rewards on fuel and telephone bills. Other cards may offer discounts on office equipment like computers and peripherals, or travel discounts on base air fare. These kinds of benefits can create valuable savings for a small business.
Builds business credit history
Having a separate credit card for your business expenses helps you build a credit profile for your business which will allow you easier access to loans in the future. If you use your personal credit card or personal funds for running the business, then you are locking up the opportunity of using your business credit card to access credit. When you use your business credit card in a responsible manner with timely repayments, you are setting up a healthy credit history that you can leverage to later access larger loans from the banking system.
Helps keep your finances organized
When you use a separate card for your business, it allows you to keep easier track of your expenses, profits and loss. It is also an advantage when doing your tax returns as you can more easily identify tax-deductible expenses.
While there are several advantages to having a business credit card, you need to be also careful about the terms and conditions that come attached with it. For instance, you might be held personally liable for charges on the card. If you are careful about the usage and are responsible about payments, a business card can be a great help to a small business owner.