As a small business owner, you may receive offers from credit card companies giving you instant approval business credit cards and no card fees, but is it wise to take them up on their offer? This is a question we will explore in this post. What advantages does a Business Credit Card hold over a Personal one? • Higher Credit Limit: With a business credit card, you will automatically have a higher limit than what you would on a personal card. This means that you are more able to make your company’s expensive purchases- whether it’s an update of electronics or air tickets for a business trip on your business credit card. A corporate card will help you meet all these expenses without maxing out. • A Credit card for business expenses will not affect your personal credit: As a Small Business Owner, it can be difficult to separate your identity from that of your business. But it may be a good idea to keep them financially separate so that your business’s outstanding credit does not adversely affect your personal credit history. While you business may come first, this could prove to be a sticky issue if you were to apply for a personal loan and your business expenses on your personal card are outstanding • Keep Track of Expenses: A business credit card will help you keep better accounts of your spending. Also, several credit card companies offer itemized bills which will enable you to get a better understanding of your business expenditure. If you use your personal card for business expenses, you would need to take the added time to sift through the credit card statement and then segregate your expenses on a monthly basis. • Better Rates and Points Systems: Credit card companies often offer businesses better rates to entice them, they also provide valuable offers and better points systems to businesses to encourage larger spending. If your card is affiliated with an Airline, then you can convert the points from the card into airline miles and book your air tickets accordingly and also take advantage of better services as a result. • Build Your Company’s Credit History: Business Credit Card history is an area several investors look into before investing. It gives them a clear idea of who your vendors are as well as your ability to pay bills. Investors, as well as banks (if you are applying for a business loan) are able to glean insights about your incomes and your ability to have a clean credit history by looking through your personal credit card statements. If you decide to apply for a corporate card, do not jump at the first one offered to you. Follow these guidelines to apply:
- 1. Determine your company credit and whether a card makes sense for your business.
- 2. Decide what kind of corporate card would be suit your needs- determine whether you want supplementary cards in your employees’ name that can be used in your absence
- 3. Read any credit card offer document carefully before signing
- 4. Talk to other businesses, find out which companies offer the best service.
- 5. Avoid cards that ask for a personal guarantee
- 6. Do not apply for more than two cards.
Follow these guidelines and you should be on your way to sound decision making with respect to your corporate credit card.