The best small business credit card for your company is one that helps you boost your spending power, earn rewards, and build credit.
Small business credit cards work just like any other credit card: buy stuff now, pay for it later. But they also have features just for small business owners—things like travel rewards points, bonus rewards for business purchases, and ways to track and manage spending.
The most obvious benefit of having a dedicated business card: keeping your business expenses distinct from your personal expenses. It means at tax time you won't have to spend hours sorting everything into business and personal buckets for your accountant.
There are few tasks more tedious than tracking expenses. Fortunately some cards have associated apps that let you tag purchases as you make them and even attach a picture of your receipt. These features, along with integration with bookkeeping software, make monthly tracking (not to mention tax time!) that much easier.
Many small business cards also make it simple to issue employee cards, as well as to monitor and limit the spending on them. Bonus: you'll earn rewards that you'd miss out on if employees used their own cards.
Credit cards can save your butt in a cash flow crunch. Like when you have to pay the bills today, but your invoice won't get paid until the next billing cycle.
In that case, you could pay the bills with a credit card today, and pay it off next week when you get paid. Business credit limits are way higher than personal credit cards (usually starting around $50,000 or more). And a credit card is easier to get than a line of credit.
Some business cards come with flexible payment terms or introductory offers, such as 0% APR financing for one year after account opening—which means you may not need to pay interest for a year or more. If you know you can pay off a large purchase within the introductory period, it amounts to a free loan.
Banks are competing for your business, which means business cards often have killer perks.
Some rewards programs help you earn points faster, including welcome offers and bonus rewards on big purchases or in spending categories like office supplies, plane tickets, Facebook advertising and office WiFi.
Others can make travelling easier, letting you speed past security lines, relax in airport lounges, or get free hotel stays or upgrades.
And, of course, there are cashback rewards cards, which earn you money that goes back on your card or directly into your bank account.
It may not be as sexy as travel perks, but having a good credit score has real-life impact. Paying your credit card bill on time each month is the most important factor in building credit—which, in turn, determines whether your business qualifies for loans, good vendor terms, office or equipment leases, and low business insurance rates.
You take on enough risk as a business owner. Having a business credit card can reduce it in at least one area. When you pay for things on your business credit card, they're often automatically protected against things like theft and damage. Sometimes you even get an extended refund or warranty period. This comes in handy for big purchases like laptops or equipment for your business.
Many cards also carry insurance for trip cancellations, delays, accidents, lost and delayed baggage, and car rentals. One less thing to think about.
Types of cards
You might use the terms "corporate card" and "business card" interchangeably, but they are actually quite different: small business cards are issued to a specific individual—usually the business owner—who provides a personal guarantee. Corporate cards are issued to big corporations; the corporation, rather than an individual, is on the hook if they fail to pay.
We're rooting for you to one day reach corporate card status (if it's in your long term plan), but in the meantime, you have a couple alternative options as a small business owner: a credit card or a charge card. Here's a breakdown of the key differences between the two:
Haven't got the time to spend hours on Google comparing credit card offers? Here are a few of the best small business credit cards according to reviews.
You know that small print? The text that makes your eyes glaze over? In this case it actually matters. Business credit cards aren't regulated by the consumer protections offered under the federal Credit CARD Act of 2009—so keep an eye out for changing interest rates, due dates, or fees.
Avoid a world of pain by diligently paying off your card each month. Penalty fees on charge cards and interest on credit cards will quickly eat into your bottom line—unless, of course, you're still within an 0% introductory APR period. That said, if you do end up paying interest for a balance on a business credit card, you can claim it as a business expense on your taxes.
Carrying a balance will also hurt your business's credit score, which will hurt your ability to secure financing in the future. It can also hurt your personal credit score. Though some issuers only report seriously sketchy activity to consumer credit bureaus, others (like Capital One), report all business credit activity.
If you're giving cards to employees, only give them to people you trust, who have frequent expenses.
Set some simple, clear rules around spending. What's the limit on meals? Hotel rooms? If employees have alcohol with a meal, can that go on the card as well? The policy can be different depending on the needs and seniority of the employee, but it should always be written down—and each card-holding employee should sign it.
Some cards will trigger a text or email each time an employee makes a purchase (or a certain type of purchase). Others will allow you to cap expenses on individual cards—like limiting gas to $50 per day. Regardless, you or your accounting department should review each statement and quickly pull cards from employees with any suspicious activity.
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