Using credit cards is an integral part of being a consumer. In the past few years, credit cards have become so useful in making purchases. In fact, these pieces of plastic are now being used not just by individual consumers but by businesses as well, which is why credit providers have launched various lines of credit cards especially made for business owners.
It is important to take note that using your personal credit card for business transactions can get you tangled in issues involving corporate law. This is because using personal credit can jeopardize the protection of the corporate veil because technically, you are co-mingling funds. Take note also that piercing the corporate veil by co-mingling funds is a major violation of corporate law.
At present, there are still a significant number of small-scale businesses that use personal credit cards but may want to reconsider doing so. Not only can using a business credit card be very helpful, but it might also save them some problems with the IRS. However, they may be unaware of the advantages of using a business credit card instead of a personal credit card. If you are interested to know how a business credit card can be good for business, here’s how.
What’s the difference between personal and business credit cards?
Before knowing the advantages of business credit cards, it is first important to know the difference between personal and business credit cards. Well, first of all, the process of establishing the amount of open credit and the interest rate vary between the two types of cards. Secondly, business credit cards have a completely different array of perks and features.
What are the benefits of using business credit cards?
Business credit cards enable business owners to make immediate purchases, which mean waiting for an approval for a loan or a lease is no longer a problem. As long as minimum payments are met, then there is not much explaining to do. Also, business credit cards can gain you access to some fast cash whenever your company requires it.
Separating your company’s expenses from your personal expenses is always a wise thing to do, which is why a business credit card can be very useful. Using this type of card can enable you to cleanly record your business’s expenses, which makes bookkeeping easier. And just like your personal card the business credit card generates its own statements, so you are fully aware of your spending.
Another thing to consider is business credit card companies issue their own reports to the credit bureau’s, the top three for business are Dun & Bradstreet, Business Experian, and Business Equifax. Individuals as well as other businesses you may wish to establish a relationship with may want to run a business credit check.
Because having a business credit card means you have a different credit report for your business, then you are establishing credit in your business’s name as well. Take note that business credit scores are becoming more and more important so owning a business credit card can help you ensure a good credit score for your business. Having a different credit score range also means that your personal credit score will not have to mix with your business credit score.
Moreover, using a business credit card can give you more related rewards for your company or business, control your employee spending, and make use of credit protection that personal credit cards do not offer. So, having the ability to get your credit checked for your business alone is another advantage.
If you are now ready to get a business credit card, you should first identify the needs of your business. On what needs of the business will the card be used for? Will it be used more on travel, transportation, or daily purchases? Will you prefer to have the option of paying your balance at the end of each month or do you prefer to carry a balance? Will employees be issued their own cards or will there be only one holder for the whole business?
These are only some of the questions that you should consider before applying for a business credit card. After you have decided on these considerations, then you’re on your way to growing your business with your business credit card.
How has your business credit card helped you grow your business? If you don’t have it yet, what are your thoughts on having one? Place your comments below and discuss with friends.
The post What is a Business Credit Card? appeared first on Credit Data.