Whether you own a small business, or large business, having a business credit card is essential to proper growth.
While many of the best small business credit cards involve an annual fee, there are still plenty of free business credit card options without a fee, along with business credit cards for bad credit.
4 Key Reasons You Need A Business Credit Card:
#1 To Build Business Credit: Many people don’t realize that your business credit is separate from your personal credit profile.
Basically, your personal credit is established through your credit inquiries, credit applications, job changes, etc. tied with your social security number. All of this is then used to piece together your credit report, offering a statement of your ability to pay back debt.
Your business credit is tied to your business name, address, and federal tax identification number (A.K.A. EIN). This credit is gathered separately by business credit bureaus based on your different trade credit transactions (which are transactions between businesses).
There are lots of small business owners out there making the mistake of using their personal information to apply for business credit, loans, and leases. Not only does this not help to build your business credit, it actually has the risk of lowering your personal credit score.
So in terms of your business’s future growth and credit needs, it’s important to start building this separate report with a top business credit card.
#2 To Earn Amazing Sign-Up Bonus Offers: Personally, I would not consider a business credit card that doesn’t offer a great new account bonus of some sort. There are simply too many good promotions out there for bonus cash, miles, and points to go for a card without.
Currently there are plenty of cash back business credit cards offering at least $100 to $200 in bonus cash. Likewise, you’ll find several new business credit cards showcasing 30,000 to 50,000 or more bonus points and miles.
#3 To Earn Higher Rewards On Business Expenses: Because they are business cards, they are structured to earn more on business related expenses compared to personal credit cards.
Many business credit cards will earn you rewards not possible with personal cards, including spending on office supply stores, cellular phone and land-line service, internet and cable TV,etc. Plenty of business cards also have great earning rates on gas, car rental, hotels, airfare, and restaurants competitive with personal cards.
#4 To Separate Business Expenses From Personal: Being involved in running a small or large business is quite taxing on the mind. The last thing you want to deal with is going through all your credit card statements and separating your personal expenses from your business ones.
This is obviously a huge benefit come tax-time.
Other Business Credit Card Benefits:
Employee Cards: This is a great way to give your personal assistant or partner an easy way to spend on business expenses, making it easy to keep track of everything to match it up with receipts.
Several of the best business credit cards also allow you to sign up for employee cards at no additional cost. Even better, a few cards will even give you extra bonus points or miles for each employee card.
Quarterly & Year End Summaries: All of the top competitive business cards will offer year-end summaries, and some even quarterly summaries. This makes it easy to sort out what categories you spend the most on, and it surely helps with categorizing your expenses for taxes.
No Foreign Transaction Fees: If your business involves a lot of international travel, this feature is a must. If you end up with a card without this benefit, you could be charged up to 3% per transaction abroad with your card. Most of the best business cards offer this, but not all.
Other Perks: Each particular card will have it’s own set of business related perks that you wouldn’t get with a personal credit card. Access to airport lounges is a great example.