Learn How to Choose the Right Business Credit Card for You

In addition, you may be eligible for additional bonuses on such often-made business purchases and expenses as shipping, online advertising, and office supply store purchases. The hitch is that when applying for a corporate credit card, you will likely be required to submit a personal credit check and sign a personal guarantee.

In the event that your company fails to make payments on the debt, you will also be held personally responsible. In the event that your small business credit card account is reported to consumer credit bureaus, you may have a negative impact on your personal credit score.

Small business cards vs. corporate cards

It’s important to note that corporate credit cards, also known as commercial credit cards, are not available to smaller businesses. These cards may have much stricter spending limits and more detailed accounting information in order to accommodate the needs of a major organization.

There may be a minimum employee or annual revenue or account balance requirements set by the card issuer in order to qualify for a business credit card. For instance, you could be required to have a minimum of 15 workers as well as either $4 million in annual revenue or $100,000 in the bank.

The business owner bears no personal responsibility for the account’s financial obligations, unlike with a traditional small business credit card. In most cases, a company’s financial standing and credit history will determine whether or not the business is approved rather than the individual’s. Card issuers for corporate cards may advertise the rewards and perks they provide to cardholders, but their primary focus is on helping businesses better monitor and control employee spending.

Disadvantages and benefits of using a credit card for your business

A small business credit card can be used for a variety of financial and operational purposes, including but not limited to cash flow management, reward points, and purchase financing. One potential downside is taking on excessive debt with astronomical interest rates. The followings are some benefits and drawbacks to applying:

Positive aspects of using credit cards for company expenses

Purchases should be kept separate.

• A business credit card can make it easier to keep track of business and personal spending separately, which can be useful when it comes time to file your taxes If you run your business as an LLC or a corporation, keeping your personal and corporate finances in two distinct compartments is essential.
• Money and other perks for doing well in business. It’s possible that a corporate credit card’s perks may be a better fit for your company’s needs than those of a personal card.
• Spending Policies for Employees. It may be less complicated for the corporation to issue a credit card to employees than to pay for their expenses individually. It’s possible that you’ll also have control over how and where employees can use their company credit cards.
• Money can be borrowed without having to pay interest if the borrower qualifies. Fast financing is available with a credit card; if you pay off your debt in full every month, you can avoid paying interest on your purchases. New cardholders can get introductory interest-free financing on some cards for a limited time.
• A focus on establishing a solid credit history for the company. Credit card companies may share account information with commercial credit reporting agencies, which can assist businesses in constructing and growing their credit profiles independent of their owners’ personal financial histories.