Are you starting a business, or do you own or manage your own enterprise? Are you wondering about the advantages of credit cards for business?
Business credit cards offer a number of advantages over traditional credit cards. Yet you may be a little overwhelmed when you realize how many credit card options are available. Are all business credit card brands the same, or can some be more advantageous to you than others?
Here’s what you need to know.
Why Business Credit Cards?
Unlike personal credit cards, business credit cards are intended solely for the use of your business. If you use them wisely, they can serve to improve your business’ borrowing terms in the future.
One of the main functions of business credit cards is that it helps business owners keep their business finances separate from their personal ones. This is extremely helpful regarding filing taxes, as well as day-to-day bookkeeping. It also provides an easy way to keep track of your employees’ business spending.
In addition, some business credit cards may offer perks that other credit cards don’t have. You may, for example, get cashback at business supply stores. Or they may offer special travel perks.
Business credit cards generally offer more flexible terms for repayment. New businesses especially may not yet have a regular cash flow and find this to be a great way to get the funding they need for starting out.
Before choosing a business credit card, however, you’ll want to do a little research. The same card won’t be the best choice for every business. There are a number of important factors to consider.
Take a Look at Your Spending
The type of credit card you choose may give you some kind of reward for the things you spend the most money on. This could be fuel, office supplies, or flights.
Itemize your expenses from month to month and determine what percentage of your budget is spent on different things. Do you spend a lot on employee salaries, staff, or inventory? What are your travel or supply expenses?
Then look up credit cards that provide cashback for some of the items you spend a lot on. Some may offer reimbursement for airline fees or access to exclusive places. If you’re going to be spending money anyway, you might as well save a little while you do!
Consider Fees
While business credit card companies offer a variety of perks, there will also be a wide range in terms of their costs. For example, annual fees start at zero and can go up to several hundred dollars.
In addition, you’ll want to consider costs such as a balance transfer fee. If you think you’d ever want to move the balance from your credit card to another account, you’ll want to keep in mind how much it would cost you.
Cash advance fees are also common with business credit cards. If you think this is a service you’ll be taking advantage of often, make sure you choose one with a fee you can manage.
If you think there’s a chance you’ll be carrying a balance from month to month, it’s also quite important to consider the interest rate your credit card will be charging. Remember that these fees can add up quickly if you aren’t prepared.
Think About the Size of Your Staff
If your company is larger, you may need more than one card on your account to keep track of employee business spending. Some credit card companies will charge annual fees for additional cards, and others won’t.
If you choose a particular card to avoid spending too much on annual fees, you may lose access to other perks. This is another reason why it’s important to carefully consider your unique business needs before making important decisions, like choosing a business credit card. You can learn more at Nav about thinking through your options.
Look at Introductory Offers
Some credit card companies offer a cash reward for spending a certain amount of money within the first three months. This may also come in the form of frequent flyer miles.
If you plan on making some big purchases when you get the card initially, a good introductory offer can be a nice incentive. Yet, as with any credit decision, you’ll want to carefully plan how you’ll pay it back.
Consider Expense Monitoring
Some credit cards offer ways to help business owners track and manage their expenses. They can help them categorize them, which makes it easier for bookkeeping and accounting purposes.
Before making a final decision about a credit card, consider how it can make your financial reporting easier.
Think About Line of Credit
Some credit card companies will offer a line of credit to businesses that will allow them to write checks to anyone up to a certain credit limit. If you feel you could use this and can’t get a separate bank line of credit, try to find a business credit card that can supply the service.
Consider All-Purpose Rewards
While some credit cards offer cashback for certain purchases, others offer all-purpose rewards that allow you to use your points in different ways. These might include gift cards or points for travel.
If you usually pay off your balance each month, all-purpose rewards offer a convenient way to bring down the cost of some regular expenses.
Credit Cards For Business
If you’re looking for an easy way to pay and manage your business expenses, credit cards for business can provide an easy solution. With a little research, you can find the optimal card for your business in no time.
Don’t stop getting smart about your business now. For more great advice, keep reading these posts.