When Should You Consider Getting a Business Credit Card? (Hint: Right Now)

Business Credit Card

4 min read

Many people assume that business credit cards are only for large companies, but that could not be further from the truth. Small businesses and even self-employed individuals can reap the many benefits of using a business credit card to pay their expenses. If used responsibly, there are numerous advantages. You can earn rewards, establish a credit history for your business, and invest in resources to help your business grow when cash might be tight.

A client of ours got a whopping $80k in cashback last year by using a company credit card. When compared to the nominal annual fee that most credit card companies charge, this perk is reason enough to sign up for a card today.

Don’t miss out on the fantastic advantages of using a credit card to pay your business expenses. If you don’t have one today, read below for reasons why you should consider it.

4 Advantages to Using a Business Credit Card

  1. You have instant access to cash flow.

Owning a business comes with many financial ups and downs. You invoice your clients and wait for the money. When the money arrives, you spend it paying your bills. Cash flow is an endless cycle. But when things aren’t flowing smoothly, stress and anxiety can set in.

Business credit cards offer financial flexibility and instant access to cash flow. Your revolving line of credit can be used when you’re waiting for client payments or even when work is slow.

  1. You can earn miles, cashback, and other rewards.

You have to pay your bills regardless, so why not get rewarded for that money spent when you can? Credit card rewards can come in many forms. Get free airline tickets and hotel stays. Or get shopping discounts. You can also opt for cashback like our client mentioned above.

There are many varieties of credit cards out there. Choose a card that best matches your lifestyle and earn relevant rewards while you spend your hard-earned cash (that remember—you are going to spend anyway!).

  1. Build credit for your business.

Just like in your personal life, the earlier you can build your credit, the better. Many small businesses get turned down for loans because of their lack of credit history. They may also get turned down because of their inability to provide company financials that the credit card needs to make a “credit decision” about the company. Set yourself up for success by building your credit as early as possible.

A good first step to building your business’s credit is to open a credit card and use it responsibly. Making timely payments and keeping your usage under certain percentages can help you build excellent credit.

  1. Maintain separation of your personal and business expenses.

Separating your personal and business expenses can save you many headaches when it comes time to file your taxes. Having a company credit card will do just that. By nature, all of your business transactions will be located in one central place—no more sorting through endless transactions when it’s time to pay your taxes.

A Few Things to Consider

  • Credit cards are not for all employees.
  • Ghost cards are a great way to avoid having plastic cards out in the world. Recurring charges should go on ghost cards.
  • You still need to keep track of your receipts. Consider using Expensify, Receipt Bank, or the new QuickBooks Online receipt application.

What Are You Waiting For?

The advantages listed above are just a few of many. Some others include having more organized records and receiving higher credit limits when compared to personal cards.

Of course, there are fees associated with using a credit card, and the interest charges can be quite high. Do the proper research before choosing a company to move forward with. Make sure you understand the fine print and use your card responsibly.

We believe that using a business credit card can help your company grow in many ways if you let it. So, what are you waiting for?!

Learn All about Cash Flow Management

Are you having problems managing your cash flow? We can help by creating cash forecasts and digging deeper into your current cash situation. Whether you are seeking simple advice or looking to outsource your accounting functions entirely, we are here to help.

We are here to make the complex simple.

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October 8, 2019