Learn How to Choose the Right Business Credit Card for You
A credit card may be a useful tool for business owners in many ways, including helping to manage cash flow, financing purchases, issuing reimbursements to employees, and establishing or improving a company’s credit rating. Also, some credit cards provide rewards programs from which you can profit and put that money back into your company.
There are, however, a variety of credit card options to consider, depending on the size and makeup of your business. While there is no formal distinction between the owner and the business, sole proprietors can use either personal or company credit cards for professional costs.
In contrast, if you establish a legal business entity, you may be required to apply for a business card in the name of your firm. In addition, corporate credit cards may be a better fit for larger firms than business credit cards, as corporate clients typically seek greater credit limits, an increased number of staff cards, and granular reporting.
Corporate and business credit cards allow you to keep your business and personal spending distinct, as well as provide access to perks not available on consumer cards (such as rewards for business travel and dining). Small business owner should weigh their alternatives carefully before applying for a new credit card.
Exactly what are business credit cards?
A business credit card is one that is applied for and used by a business as opposed to an individual. Credit cards issued to medium and large businesses are known as corporate and commercial credit cards, whereas small business credit cards go by the name “business” or “small business” cards.
Credit cards for small businesses versus personal credit cards
Credit cards tailored to the needs of small business owners and sole proprietors are available. The cards function similarly to personal credit cards, but there are some key differences to keep in mind.
The CARD Act of 2009, which added several consumer protections such as limiting when card issuers can hike interest rates or how much they can charge in fees, does not apply to business credit cards but does apply to personal credit cards. Small company credit cards may have additional conditions imposed by the card issuer. However, this is not always the case.
Though personal credit cards are always a possibility, small business credit cards might be appealing due to the many advantages they often include. You can add free employee cards to your account and set up separate user profiles on most business cards.
