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Do You Need a Business Credit Card?

As a small business owner, deciding on whether your company needs a credit card can be difficult. You may be concerned about interest payments, penalties, and annual fees, as well as the time and effort it takes to apply. However, for most businesses, having a company credit card can be a major asset to help operate and expand the business. When used properly, a small business card can help mitigate cash flow issues, keep personal and business finances separate, and boost a company’s credit rating while enjoying rewards such as points, cash back, and other perks.

Convenience and Access to Cash Flow

Company credit cards offer convenience. Business owners can access funds much more quickly and easily than having to find cash and/or use a checkbook when a purchase is needed. A credit card is especially convenient to do business online with vendors, contractors, and suppliers.

Company credit cards grant you access to working capital. A business credit card can enable you to make vital purchases to keep the business moving forward when customers are taking longer to pay or when sales are slow and the business is short on cash.

Separation of Personal and Business Expenses

Company credit cards make it easier to separate personal from business expenses. Separating personal from business finances is very important not only to simplify the accounting during an audit or come tax season, but also to reduce personal liability for business related expenses. The monthly and annual credit card statements provided by credit card companies can help business owners track, categorize, and manage expenses.

Build Company Credit

Company credit cards can help establish and improve your company’s credit score. Your business credit is tied directly to your Employer Identification Number (EIN) and the spending and payments your business makes, which includes business credit cards. Building up a good payment history can help your business borrow money with better terms, without personal guarantees and lower interest rates, and even have a positive effect on insurance rates and your company’s ability to rent property.

Points, Cash-Back, or Other Business Perks

Similar to personal credit cards, company credit cards also offer the ability to earn rewards and other business perks. The rewards can consist of points that can be redeemed to purchase gift cards or travel-related purchases such as plane tickets, rental cars, and hotel rooms, as well as cash-back in the form of a check or statement credit. Other business perks can include travel accident insurance, airline lounge memberships, extended warranties on certain purchases, and even early access to tickets for major entertainment and sports events.

Overall, unless misused or mismanaged, having a credit card can have a positive impact on your business. Based on the size of your company, priorities, and the credit limit that you need, there are numerous company credit card options that you can choose from. It is good to compare the terms and features such as grace periods, interest rates, fees, and rewards, when deciding on the right credit card. At CPA by Choice, we are here to help you find the best fit for your business.


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