By Alban (Guest Post)
A standard credit card gives you the security and ease of use to access funds at anytime, anywhere, online, over the phone or in person, and while not all credit cards can be opened for business use, there is a wide range of business credit cards to choose from to keep your corporate spending documented, and give your business the same purchasing freedom you have come to rely on with your personal credit cards.
Benefits of Business Credit Cards
Don’t worry that your business is too small or doesn’t make enough purchases to warrant a business credit card, because there are so many different types of business credit cards available you are sure to find one to suit your business. So check out all the benefits your business can get from using a corporate credit card:
Keep your personal and business transactions separate. Whether your business is big or small, there will come a time you need to make a business purchase from your personal funds. Then there will be another time, and another and after a while you get tired of keeping track of the paperwork. Unfortunately, if you don’t track the paperwork surrounding your business purchases, then you could be missing out on business tax deductions, and paying for business expenses from your personal funds. Even if you are a small business owner or a sole trader, you can be so much more organized if you have one credit card statement on which you know all the purchases are for business. If you’re not working for a small business, explain this to your boss to convince him.
Make sure payments anywhere. Another reason you may end up absorbing business purchases is because your business currently makes payments using check or direct transfer, and this is not always convenient. However, with a business credit card you can make payments or purchases quickly and securely online, over the phone, by fax or in person.
Building a good business credit history.
Your business has a credit report just like you do and on it is information about its spending habits and credit history. Therefore, to build a strong credit report for your business start using a business credit card – responsibly. This builds your business’ credit history, to make commercial and business finance easier to obtain in the future.
Manage your money until your customers pay. Just like personal credit cards, a business credit card will have interest free days, also known as a grace period. This is the time when you can make business purchases and pay your bills to keep your creditors happy, while you wait for your customers to pay their bills. Rather than writing a check for a bill your business has to pay – which is then cashed and debited from your account in just a few days – you can often have between 30 and 55 interest free days on a business credit card, after which time you can deposit your customers’ payments on your credit card and pay it back to zero.
Fees and interest on a business credit card can be tax deductible. Because you are using your business credit card to make business purchases, the annual fee, any transaction fees and any interest charges can be entered into your tax return as deductibles. All you have to do is file the appropriate forms, and your accountant can tell you how to do that for your specific business.
How to Compare Business Credit Cards
You need to make comparisons of business credit cards in relation to the specific needs of your business, but following are some of the most important features you will need to look for on a business credit card, and how to compare business credit cards based on the features you need:
The interest rate. Just because you can claim interest charges as a tax deduction, it doesn’t mean you can’t still look for the business credit card with the best interest rate. Typically the interest rate on a standard business credit card is 13.45% and on a business credit card with a rewards program it is 15.27% on average. Therefore, look for the lowest business credit card interest rate, but not to the exclusion of all other features.
Payment capabilities. Here you need to compare how you can use your credit card, and how others in your business can use the account too. For example, are you looking at an American Express or Diners Club card, as these are not as widely accepted as a Visa or MasterCard as their merchant fees are higher. Many credit card providers therefore offer companion cards where you can use your American Express business credit card to collect more points, but where American Express is not accepted, you can use a companion Visa or MasterCard, linked to the same account. Also look at who can use the business credit card, and the costs of additional card holders. You may even want to consider features which allow you to set different limits of different additional cards, for staff in your business with differing levels of responsibility and trust.
Rewards programs and discounts. Business credit cards are a competitive market and each provider wants to attract your business. Therefore, many business credit cards also offer attractive rewards programs or discount offers, and all you have to do is choose the card with the benefits which would best suit your business. For example, do you want the business credit card which offers you discounts on office supplies and computer software, or the one which includes discounted travel offers? Or would you rather collect points on your business credit card as incentives for staff bonuses or customer giveaways?
A business credit card can mean a lot more to you and your company than a suave way to pay for a corporate lunch. If you can manage your business credit responsibly you can gain control over your business finances, reduce your business’ tax obligations and keep track of business and staff spending, all with one card.
Alban is a personal writer specialising in credit card comparison. He helps people to compare credit cards online.
Do you use a business credit card? Would you recommend it to others, especially to small business owners?