If you’re thinking about getting a business credit card, you may not be sure whether you should get a card, and whether it will benefit your business. While people who have trouble managing their money and controlling their spending should probably not have control of a business credit account, there are several advantages to having a business credit card.
1. Build Your Business Credit Profile
If you intend to lease equipment or finance big-ticket items with a line of credit from a vendor, you will need to create and maintain a business credit profile. By using a business credit card wisely, you can establish business credit, and you can work on building your credit over time.
2. Manage Business Expenses
Many business credit cards offer very detailed statements that make it easy to itemize your business expenses at tax time. Whether you do your own business taxes or pay a bookkeeper or accountant, the time savings will give you more resources to spend on other parts of your business.
3. Separate Business and Personal Spending
If you are a sole proprietor or an incorporated one-person shop, you may sometimes buy business items on your regular shopping trips. With a business credit card, you can pay for business purchases separately and keep your spending separate. This is particularly important if you have a corporation and need to protect the corporate purse. Separating purchases can be very difficult otherwise, but with your business credit card it becomes quite simple.
4. Survive Low-Cash-Flow Situations
Every business goes through peaks and troughs as far as income and cash flow. Unfortunately, quite often during the troughs you find that you need operating capital to get back onto a peak. This can be difficult, but having a business credit card can keep you up and running during low cash flow situations and help you weather slow times.
5. Cut Down on Reimbursement Paperwork
If you have employees, or if you were often spending money and having the business reimburse you, a business credit card removes the need for that. You can simply use a business credit card, and have your employees use one, for business expenses. The credit card statement will itemize your expenses, and you’ll have a much simpler time figuring out where the money went.
You can run a business well without a business credit card, but it is not exactly easy. Using a business credit card to manage expenses makes everything easier, and allows you to keep your expenses separate and keep track of them.
While business credit cards are not right for everyone, there are advantages to using one well, and if you have a business credit card, even if you only use it during slow periods to finance operations for a while, you will be surprised how helpful it is in taking care of business until things pick up a little. Just the access to business funding that a business credit card provides can make your business run much more smoothly, even if you don’t use the card often or at all.