If you’re wondering if your small business needs a credit card, the answer is an unequivocal “YES.” If you are serious about running a business, you need a business credit card for several reasons, not the least of which is to keep your business and personal expenditures separate. This can be a tricky situation for small business owners, particular one-person shops, so having a business card to separate expenses helps you protect the corporate purse.
Business credit cards also allow business owners to cover expenses during low cash-flow times. You may find yourself with an urgent need for supplies or equipment to complete a big project, but without the cash to cover the expense. Using your business credit card lets you pay for what you need without using the cash you currently have and need for other purposes.
If you have employees, issuing them business credit cards allows them to cover expenses related to work, without having to get reimbursement later. Of course, you’ll need to have employees you trust, and keep a close eye on their expenditures, but this is not a major problem for most businesses and most employees.
If your business credit card has a rewards program attached, you can get cash, points or other rewards that you can use for business travel, equipment or supplies, just by using your business credit card to pay for business expenses.
Another important reason for getting a good business credit card is that you may be able to transfer your balance to the card, and get a better interest rate. If you have a personal card you’ve used only for business expenses, you can transfer the balance and generally do better.
Business credit cards usually have a higher credit limit, sometimes upwards of $50,000, which will give you more flexibility in purchasing necessities for your business. You can even take a cash advance, if necessary, though the rates on this may be high and you will want to repay the advance as soon as possible.
In general, business credit cards have better terms, including lower interest, than personal credit cards, so using a dedicated business credit card can save you money on transactions you would make anyway.
As you can see, having a business credit card can help your business run more smoothly, run more economically, and afford the important equipment and supplies you need to take care of your obligations.
Can you run your business without a business credit card? Certainly. Many businesses operate without any credit cards or business credit at all. But if you want to avoid personal liability and build your business, a business credit card is a good idea. It will help you grow your business effectively and economically, and give you freedom you do not currently have.
Talk to your bank about a business credit card, or do a search online for business credit cards. Most major credit card companies, including American Express and Chase, offer business credit cards at competitive rates and with good terms.