Whether you are an established business with an armada of employees and plenty of expenses or a small start-up, at some point you will have to decide how to handle your company's expenses. If you are setting up a business or if you are thinking about setting aside a credit card purely for business purposes you have a lot to consider. One of the biggest decisions is whether you should simply use a personal card for expenses or if you should get a business credit card. The right business credit card can do a lot for your business that a personal card couldn't do, even for small businesses. Perks for cards specifically for business are typically just as good or better that cards that are designed for personal use.
There are also several other benefits:
- Keeping your personal and business finances separate is essential for organization.
- Having a business card will let you establish a line of credit specific to your business.
- If you know your spending habits and handle your card with care you can take advantage of great rewards programs.
Separation of finances
Separating your finances is an important step in managing your personal finances and those of your business. Having a distinct card for your company can help you organizationally. If you use your own card, you will have to go through your statement each month and manually separate expenses for each budget.
It also can affect your tax situation. Separating your finances can help you take advantage of certain business owner tax benefits that you can't get as an individual.
Who needs the credit?
When deciding whether or not you should use a personal card comes down to your own personal financial situation and the size of your company. If you have a tiny company, you might not need a business credit card. For instance, if you are a freelancer a business credit card may not be required. If you run a large or a rapidly growing company using your own personal card may quickly cause complications. However, even a small company can benefit from a card.
A company card can establish a line of credit for your business which can help with business loans in the future. However, if you use your own card on your small business it can help bolster your own personal credit (if you pay it off faithfully).
Watch out for fees
If you do decide to use a business credit card make sure you choose carefully. Certain business cards come with some tantalizing perks but also include some heavy fees. A large business could eat those fees and take full advantage of the rewards without a problem. However, heavy fees would be more trouble than they are worth to a small business.