Business Credit Cards
From airline reservations to rental cars and online purchases, much of the business and consumer world revolves around credit cards. Credit cards provide the ease of instant funding, when and where the average consumer needs it, whether for personal or business purchases. Business credit cards allow businesspeople to make purchases in the name of their company, often with flexible spending, thorough reporting and low APR and interest rates.
How do business credit cards work?
Much like traditional credit cards, credit cards for businesses often carry the Visa® or MasterCard® logo. Some business cards require a personal signature upon purchase while others do not. The cards that require a signature rely on the business owner's personal credit history and rating instead of the business' ratings.
Credit cards that do not require a signature are based on the business and its credit ratings. These types of cards may require the business owner to open a bank account in the business' name and also register the business with all three credit bureaus.
Business owners and their employees can use business credit cards just like they would use a traditional credit card - online, over the phone or in person. These cards provide flexible credit lines and a great opportunity to build positive business credit ratings and history. Some business cards may not carry a spending limit at all.
What are the benefits in using these cards as a small business owner?
Small businesses, like any other business, have specific financial needs for budgeting, reporting and saving money in any way possible. Flexibility and convenience also contribute to the value of business cards and small business credit cards.
A number of additional benefits include:
• Extended availability of funding - Business owners can charge items when they need them. They can then pay for their purchases once they've received the money from their customers.
• Expediency for reimbursable expenses and tax-deductible expenditures - These cards make handling business-related meals, travel and entertainment costs a breeze.
• No spending limit - Some credit cards for business purposes do not carry spending limits.
• Flexible credit lines - Business owners can typically secure credit lines that satisfy their organization's needs.
• Facilitated reporting of expenses - Lines of credit specifically for business allow cardholders to keep track of all expenses and expenditures that may be tax-deductible. Come tax time, itemized credit card statements will make profit and loss reporting much easier.
• Low APR, low interest rates - Many credit cards for business and credit cards for small business offer another enticement, low APR and low interest rates, which alleviate some of the financial burden involved with carrying a balance from month to month.
• Ability to set individual spending limits - Most business credit cards give the cardholder the option to establish the spending limits that best suit their business needs.
• Helpful in budgeting - These cards provide detailed credit statements with each billing cycle, giving the business owner insight into their monthly financial obligations.
• Reward points save money - Among a wide variety of credit cards available for small business owners, some cards present reward points to cardholders for every purchase they make. These reward points eventually add up for frequent flyer miles, free meals or prizes and even cash back.
• Build up good business credit - Thanks to the convenience, flexibility and fair terms of these credit cards, business owners can easily build a favorable credit rating and credit history for their business.
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How can business credit cards save my business money?
Smart spending and smart saving practices in any business situation contribute to a positive bottom line. When it comes to analyzing profit and loss, business owners will find that they can impact their financial outlook by doing things to save money throughout the year.
Firstly, all consumers should have a rewards-based credit card, whether or not they own their own business. Rewards cards often give back nominal percentages to the cardholder when he or she purchases every day necessities like gasoline, groceries and drugstore goods. Some cards provide higher percentages, five percent or more, for those mainstream purchases and a standard one-percent return on all other purchases. These savings may seem small at first, but after months of supplies, travel expenses, meals and fuel needs, those reward rebates do add up.
Another fairly successful way to save money with a business credit card is to seek out special discounts offered specifically for cardholders. Some merchants may provide programs for their regular customers, or they may offer first-time discounts, frequent coupons or other incentives. Small business owners can benefit from these discounts by actively seeking them out and by charging discount purchases on their rewards cards to capitalize on all possible cash-back opportunities.
Tips to save money for your small business:
• Pay off your balance in full each month. Even though your card's APR and interest rates may be low, you can avoid paying any interest fees at all if you don't carry a balance.
• Carry at least one rewards credit card for your small business.
• Do not acquire cash advances. This method of obtaining funds often carries with it substantial fees.
• Combine any money-saving efforts possible to secure the best deals and the most cash back. Take advantage of coupons, rebates, discounts, sales, clearance and reward points.
Why can't I just use my personal credit card?
Technically, business owners could use their own personal credit cards. However, when a consumer uses his or her personal credit card instead of a business credit card, the card draws from his or her personal credit history and ratings instead of the business' ratings. When a business owner uses a business credit card instead, he or she can build good credit for the business while also protecting his or her personal credit from harm if the business should fail.
Furthermore, it makes tax time so much easier if businesspeople keep all their business expenses on one credit card. When it comes time to tally deductible expenses, it benefits small business owners to keep all their business' financial data on one credit card's billing statements. If a cardholder uses several different credit cards for business-related purchases, the mixing and matching could create credit chaos when it comes time to sort through all the expenditures.
Finally, cardholders benefit from using a business credit card because they will enjoy lower interest rates and APRs, more flexible lines of credit, special discounts designed especially for business owners, and sometimes no spending limit at all.
How can business credit cards provide insight into my bottom line?
Large organizations and small businesses alike may share business credit cards with employees for business-related expenses. Business credit cards may help business owners to control employee spending, which protects the company's bottom line. Many credit card issuers offer additional business cards for other employees, available at no additional cost. Business owners can issue credit cards to those employees who might need them, and they can keep track of how much company money those individuals spend.
Business credit cards and small business credit cards also provide insight into the bottom line when cardholders review their monthly statements. These statements paint a clear picture of the year's expenditures on a month-to-month basis, which makes tax preparation easier than ever.
How can business credit cards facilitate tax preparations?
Thanks to monthly billing statements with itemized purchase records, expense data is readily available in a clean and compact format when tax time rolls around. To further facilitate tax preparations, business owners can use their monthly credit card statements to create expense reports for each month of the year before it is time to fill out a profit and loss sheet.
Business credit cards can cover taxes, for a price. Is it worth it?
To determine if it is in your best interests to pay for your taxes with a business credit card, first find out how much your card will charge you to do this. Next, determine how much money you would earn through your rewards program. Do the math and figure out if it makes the most sense for your needs to pay by credit card or simply to write a check. If you really can't afford to write a check, pay for your taxes with a business credit card to avoid the late penalties and fees you will encounter if you don't send your money to the government on time.
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What are the best business credit cards out there?
Depending on one's business needs, a number of great business credit cards are ready to provide lines of credit for financial ease. Three top business credit cards that benefit any size business include the following:
Blue Cash® for Business Credit Card:
• 5% cash back rebates
• No limit on the amount of rebates one can earn
• 0% introductory APR for six months
• Built-in smart chip provides better Internet security
• No annual fee
• For businesses with good and excellent credit
Advanta Platinum Business Card:
• 0% for 12 months
• No annual fee
• Detailed expense reporting
• Free online account management
• Customized cards display business name on front
• Up to $50,000 credit line
• 0% intro APR on balance transfers and purchases for 12 months
What's the most popular?
The American Express Business Gold Card tops the charts among business credit cards. This credit card compiles a comprehensive array of unique features and benefits, including expense management reports to allow business owners to track spending in a number of ways. This card also carries no set spending limit. A Membership Rewards program allows cardholders to earn points whenever they shop with the Business Gold Card. When points accumulate, the cardholder can redeem them for travel, merchandise and other rewards, all the while saving money for the company.
To maximize on business benefits, cardholders can use the Business Gold Card for business related purchases. This allows for easier reporting of personal and business expenses when it comes time to deal with tax preparation. Business owners may also request additional cards for employees, which gives the employer a simple and convenient method of tracking employee expenses. Cardholders may also take advantage of special discounts and savings opportunities at such merchants as AT&T, FedEx®, Hertz®, Staples® and 1-800-Flowers.com®.
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Quick Summary...How can I make the most of my business credit card?
A business credit card can truly benefit one's business in a number of ways, from providing easier reporting and budgeting options to helping business owners save money and keep track of individual employee spending. To make the most of one's credit card for business, practice smart spending and saving techniques.
Tips to make the most of a credit card for small business:
• Select a business credit card with a rewards program.
• Use your small business credit card whenever you purchase items included in the rewards program, especially if those items earn you a higher percentage rate, such as 5% back for gasoline purchases.
• Shop with your credit card when you know a store is offering good deals and sale prices. Also, use your business credit card when you purchase items included in a special discount program especially for business credit cardholders.
• Take advantage of the reporting and budgeting capabilities included with the credit card's detailed monthly billing statements.
• Most importantly, pay off each bill in full to avoid paying any unnecessary interest fees.
 DIG DEEPER WITH OUR PROFESSIONAL ADVICE.
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