You may think that business credit cards are something that only large companies can handle, but nothing could be farther from the truth. According to recent statistics, 75% of business credit cards are actually issued to small companies, that is, companies with fewer than five employees. If you have a small business or you are looking to start one, a business credit card might be just the thing you need.
There are several reasons to get a business credit card for your company, whether you have several employees or it’s just you on your own. For small businesses that are just starting out, a business credit card can be enormously handy, if not vital when there’s a money crunch. As a small business you have many advantages over a larger company, like being a great deal more versatile and much more hands on with your client base, but one disadvantage that comes with small businesses is that you have less in the way of discretionary funds. Financial issues that a larger, more established company can shrug off can be enormously detrimental to a company that is just starting out, and a business credit card can shrink some of the disadvantage.
Some cards come with purchase tracking software, making it easy to map out your business costs and expenses. Accounting is very important, especially when your company is getting started, and this can help immeasurably, especially if you tend to be an indifferent bookkeeper.
When thinking about opening a line of credit for your business, there are a few things you need to know. The first is that, for a little while, your funds and that of your company are going to be intertwined. Because a business credit card will hold you liable for any defaulted payments or any overdrafts, you can find your personal credit in jeopardy if your business starts having issues. This is all explained on the application, so be sure you read it carefully. Even if creditors do not have to get involved, it is important to understand how late payments on your business’ credit card can affect your own personal credit history. There is hope, though. After a few years of a good relationship with a credit institution, you can always request that the personal liability component on your card be removed. This is something that is frequently decided on a case by case basis, so make sure that you maintain a good rapport with your credit card company.
When deciding on what business credit card to get, keep the following in mind. First, think about the time frame of your common purchases. With a charge card, you have no spending limit, but frequently the full amount charged will come due within a period of thirty days. If you require more flexibility, look into another credit card option. Also, with a business credit card, you can look for rewards that will be issued. If you are a small business, look for the rewards that will suit your company best, whether they are flyer miles or discounts at places that you frequent. Finally, if you are starting to issue credit cards for employees, see if your provider will offer a discount or even provide the cards free of charge.
There are many things to remember when you are considering whether to apply for a business credit card. Before you make the plunge, though, remember to consider the ins and outs thoroughly and to figure out what the advantages are to you and your business.