What are the benefits of business credit card? As I see it, there are so many benefits of business credit card. Meaning, there are lots of advantages that you can enjoy once you apply for such a card. Below are some of the benefits of business credit card:

Track of Business Expenses:

One of the best things that a company business credit card can do is to help you with keeping track of your business expenses. Meaning, you don’t have to keep writing in a checkbook every time you spent money for your business expenses. As a result, you will be able to know exactly how much money you have spent for your business expenses and you can calculate your future business expenses. In addition to that, you can enjoy bonuses of business credit card whenever you make new purchases.

Control Your Expenses:

Another great thing that a business credit card can do for you is that it will help you to control your expenses. In other words, you will be able to control how much money you spend on business expenses. Therefore, you will be able to determine whether you are going to take good care of your business or not. After all, controlling your business expenses is very important because it will help you to keep your business running smoothly.

As previously mentioned, they help you to control your expenses by sending a bill each month. Besides, you will receive a statement. Business credit cards furthermore help you to track all of your expenses. Business credit cards furthermore provide you with the opportunity to earn additional income. In other words, you will be able to add your business expenses onto your current salary.

Types of Business Credit Cards

There are two main types of business credit cards: business debit cards and business credit cards. Business debit cards will not help you with any payments and they will just help you with keeping track of your expenses. Meanwhile, business credit cards will help you with making payments whenever you make any purchase. However, business credit cards usually come with an additional fee. Business credit cards may also differ from individual credit cards in the way that they report to different credit bureaus.

Apply for an Advance:

Aside from being able to add your expenses onto your current salary, business cards also allow you to apply for an advance on your business expenses. You can use the advance as your down payment for your new house or car. However, if you use the advance for your regular expenses, then you will have to pay interest. Thus, you will not only be increasing your debts, but you will also be increasing the interest that you pay on your bills as well.

Interest Rate:

Furthermore, business credit card providers offer different interest rates. This means that your interest rate may be higher than the interest rates that you are currently paying. Moreover, most providers do not allow customers to make purchases without first obtaining a credit rating. This credit rating requirement could prove to be inconvenient, especially if you are not familiar with how to obtain your credit rating. Business credit card providers may require customers to obtain their credit profiles in order to make payments.

Business Transfers:

Business credit card providers usually offer business transfers. These transfers involve transferring the balance on your existing credit cards to new credit cards. The transfer of the balance does not usually affect your credit rating. Therefore, business transfers are great ways to avoid high interest costs. Businesses that make these types of transfers generally offer very low interest rates and reward programs that can save businesses a lot of money.

Tracking Cashflow

Business credit cards offer a revolving line of credit, providing businesses with immediate access to funds for various expenses. This flexibility in cash flow management enables businesses to cover unexpected costs and seize opportunities for growth without disrupting operations. 

By leveraging credit card financing, businesses can effectively manage short-term cash flow gaps, such as inventory purchases or equipment repairs, while preserving liquidity for strategic investments and long-term growth initiatives. Additionally, credit card financing allows businesses to capitalize on time-sensitive opportunities, such as limited-time discounts or seasonal demand spikes, without delay.

Enhanced expense management

Business credit cards streamline expense tracking and management by providing detailed statements and categorizing transactions. This simplifies accounting processes and helps businesses monitor spending more efficiently. With customizable expense tracking tools and real-time transaction notifications, businesses can easily track and categorize expenditures, ensuring accuracy and compliance with budgetary guidelines. By centralizing all expenses onto a single platform, businesses gain greater visibility into their financial health and can make more informed decisions regarding resource allocation and cost optimization strategies.

Rewards and incentives

Many business credit cards offer rewards programs tailored to business spending, such as cash back, points, or miles on business purchases. These rewards can be redeemed for travel, office supplies, or other business-related expenses, providing additional value to cardholders. By strategically leveraging rewards programs, businesses can maximize their purchasing power and offset operational costs. Whether earning cash back on everyday expenses or accumulating points for future travel, business credit card rewards incentivize spending and provide tangible benefits that contribute to the bottom line.

Business-specific perks

Business credit cards often come with perks designed to benefit business owners, such as discounts on business services, complimentary airport lounge access, or expense management tools. These perks can help businesses save money and improve operational efficiency. From discounted shipping rates and office supplies to complimentary software subscriptions and business consultations, these perks provide tangible value to business owners and enhance the overall business experience.

Business credit building

Using a business credit card responsibly can help establish and build a business credit profile separate from personal credit. This can improve the business’s access to financing, better terms from suppliers, and increased credibility with lenders. By consistently making on-time payments and maintaining low credit utilization ratios, businesses can demonstrate creditworthiness and strengthen their business credit scores over time. 

A strong business credit profile not only enhances access to capital but also instills confidence in potential investors, partners, and suppliers, facilitating strategic partnerships and business expansion opportunities. Furthermore, a positive credit history can lead to preferential treatment from lenders and suppliers, resulting in more favorable loan terms and payment arrangements.

Purchase protections

Business credit cards may offer purchase protections, such as extended warranties, purchase insurance, and fraud protection. These protections can safeguard business purchases and provide peace of mind to cardholders. With comprehensive purchase protection features, businesses can mitigate the financial risks associated with defective products, fraudulent transactions, or unexpected damages. 

Whether replacing a malfunctioning piece of equipment or disputing unauthorized charges, purchase protections provide a safety net that ensures business continuity and minimizes financial losses. By choosing business credit cards with robust purchase protection policies, businesses can safeguard their investments and focus on driving growth and innovation without fear of financial setbacks.

Employee spending controls

Business credit cards allow business owners to set spending limits and monitor employee expenses in real-time. This helps prevent unauthorized spending and ensures that employees adhere to company spending policies. With customizable spending controls and transaction monitoring features, businesses can establish clear spending guidelines and enforce accountability among employees. 

By setting individual spending limits and restricting transaction categories, businesses can prevent overspending and unauthorized purchases, reducing the risk of fraud and misuse. Additionally, real-time alerts and activity reports empower businesses to identify and address spending discrepancies promptly, maintaining financial integrity and transparency across the organization.

Business expense reporting

Business credit cards often provide detailed expense reports, making it easier for businesses to track and analyze spending patterns. These reports can be integrated with accounting software, simplifying financial reporting and tax preparation processes. By leveraging automated expense reporting tools and customizable reporting features, businesses can streamline expense reconciliation and financial analysis. 

Whether generating quarterly spending summaries or categorizing expenses for tax purposes, business credit card reporting capabilities simplify administrative tasks and facilitate compliance with regulatory requirements. Moreover, seamless integration with accounting systems allows businesses to access real-time financial data and make data-driven decisions that optimize resource allocation and drive business growth.

Travel benefits

Many business credit cards offer travel-related benefits, such as travel insurance, rental car insurance, and concierge services. These benefits can be valuable for businesses that frequently travel for work or host clients and events. From complimentary airport lounge access and priority boarding to travel accident insurance and baggage delay coverage, travel benefits enhance the travel experience and provide added security and convenience to business travelers. 

Additionally, access to dedicated travel concierge services and exclusive travel discounts enables businesses to maximize their travel budgets and streamline trip planning processes. By choosing business credit cards with robust travel benefits, businesses can elevate the corporate travel experience and enhance employee satisfaction and productivity on the road.

Simplified supplier payments 

Business credit cards can be used to make vendor payments, helping businesses manage cash flow and maintain positive relationships with suppliers. Additionally, some cards offer discounts or rewards for business-related purchases, further incentivizing their use. By centralizing supplier payments onto a single payment platform, businesses can streamline accounts payable processes and optimize cash flow management. Moreover, by leveraging credit card rewards and incentives, businesses can earn cash back, points, or discounts on vendor purchases, effectively reducing procurement costs.

Perks

A business credit card may offer more perks than your personal cards, such as more points for cash-back or frequent-flyer programs, waived airline baggage fees, airline lounge memberships, and hotel and car rental discounts. If you don’t do a lot of business travel, a general cash-back rewards card may be best.

Building company credit

Building up a good payment history can help establish and improve your company’s credit score of. Just as improving your personal credit score can enable you to borrow more money at a lower interest rate and even have a positive effect on insurance rates and your ability to rent property, the same holds true for your business credit. Even if a business is set up as an LLC or a corporation, the business owners are often required to personally guarantee loans to the company. Once the company itself establishes a good credit history, personal guarantees may no longer be required.

Cards for employees

Once you’ve acquired your business credit card account, you may be able to obtain additional cards for your employees. Doing so makes it easier for the employee to conduct company business while enabling you to track the employee’s spending. You may also be able to set a spending limit for each employee, thereby preventing an employee from going over their budget.

Read Also: Ways to Improve Your Cash Flow

Applying for a business credit card generally involves the same process as for a personal credit card. If you are operating your business as a sole proprietorship, you may need to provide your social security number, unless you have secured an employer identification number (EIN) for a partnership, LLC, or corporation.

Separation from personal expenses

To maintain good bookkeeping, your personal expenses should be kept completely separate from business expenses. Having a separate credit card just for business keeps accounting tidy and can safeguard your personal assets by not mingling them with those of the business.

Easier than loan qualification

Quite often, the process for getting a business credit card is faster and less of a hassle than obtaining a formal small business loan. This is especially true if you don’t have significant collateral, which is often required by banks and other lenders for either a traditional loan or a business line of credit.

Reduced cash-flow problems

Many new business owners start out operating on a tight budget. A business credit card can enable you to make vital purchases even if you are temporarily short on funds. This can even out your cash flow, making your business less subject to short-term ups and downs.

Purchase protection

With most cards, you have the ability to dispute any improper charges on the account and to avoid making payment until the dispute is resolved. Many credit cards offer some form of purchase protection in the event goods you purchase are lost, stolen, or not delivered.

Convenience

It is much easier to carry a business credit card in your wallet than to rely on having a large amount of cash or your checkbook when a purchase is needed. A credit card is especially convenient for online purchases. And with the trend toward a cashless economy, a credit card may be the only way to pay for certain goods and services.

Pros and Cons of Business Credit Cards

Whether you run a fast-growing startup or a part-time side hustle, a business credit card can help you finance business purchases. corporate credit cards make it easy to segregate personal and corporate costs and frequently come with significant business benefits, but they may not be for everyone.

Here’s a closer look at the benefits and drawbacks of business credit cards to help you determine if one is good for you.

Pros

Using business credit cards for business expenses can have several perks.

• Keep Business and Personal Expenses Separate

If your business is incorporated, it’s important to keep business expenses and finances separate from your personal finances. Combining the two could void the protection your business entity provides and put your personal assets at risk. Running a sole proprietorship or side gig? Using a business credit card rather than a personal credit card helps demonstrate to the IRS that your business is for profit (and entitled to tax deductions) rather than a hobby.

• Streamline Your Business Finances

Putting business expenses on a business credit card makes it easy to track your spending. Many business credit cards automatically break your spending into categories such as travel, entertainment or business services, streamlining tax preparation and bookkeeping.

• Establish a Business Credit Score

A good business credit score can make it easier to qualify for loans and other types of business credit. Responsibly using a business credit card can help you build a business credit history. Make sure the credit card issuer reports to one or more of the commercial credit bureaus (Experian, Dun & Bradstreet and Equifax). Making timely credit card payments and maintaining a low balance (or ideally, paying your bill in full each month) can help improve your business credit score.

• Make Convenient Payments

Business credit cards offer a safer and more convenient way to make purchases than writing checks or carrying cash. You can also typically get business credit cards for your employees to use and set limits on their spending. Although you’re ultimately responsible for the bill, giving employees access to company credit cards enables them to easily cover day-to-day expenses such as entertaining clients or fueling up the company car.

• Access More Credit

Business credit cards usually have higher credit limits than personal credit cards, giving you more flexibility to make larger business purchases. Using a personal credit card for both business and personal purchases gives you less to spend. It could also push your personal credit utilization over 30%, which can lower your personal credit score.

• Manage Cash Flow

As a business owner, you sometimes need to spend money to make money. For example, a retailer might need to buy inventory before the holiday shopping season and not get paid until the items sell. Using a business credit card to finance the purchase provides a grace period before you have to pay the bill. Ideally, you’ll have sold the inventory by the time your credit card payment is due, giving you the funds to pay off the balance.

• Earn Rewards

Business credit cards often offer rewards in the form of points or cash back. These cards typically earn rewards for business-related purchases, such as internet and cellphone bills, shipping, travel, restaurant meals, gas, advertising or office supplies. Some business credit cards also come with useful perks such as extended warranty or purchase protection on qualifying items purchased with the card, travel emergency assistance and auto rental collision damage waiver coverage.

Cons

There are a few downsides to business credit cards you should consider before applying for one.

• Could Negatively Affect Your Personal Credit

Small business credit card issuers may report your account to the three major consumer credit bureaus (Experian, TransUnion and Equifax). Missing payments could damage your personal credit (and your business credit if the card issuer also reports to business credit bureaus).

In addition, getting a business credit card usually requires signing a personal guarantee. If your business runs into financial trouble and can’t pay the bills, you’ll be expected to make the credit card payments from your personal funds. This could be difficult when your business is struggling.

• May Offer Fewer Protections Than Personal Credit Cards

Consumer credit card users are protected by the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act). CARD Act protections include limiting the interest and fees that card issuers can charge you. The CARD Act doesn’t apply to small business credit cards, although some business credit card issuers voluntarily comply with CARD Act provisions. Before applying for a business credit card, check the card’s terms and conditions for details about fees and interest rates.

• High Interest Rates

Small business credit cards usually have higher interest rates than business or personal loans or personal credit cards. As a result, a high balance on your business credit card could quickly accrue a lot of interest that can be tough to pay off.

To avoid paying interest unnecessarily, use business credit cards for purchases you plan to pay off right away. When you need to borrow money and pay it off over a longer term, a business or personal loan may make more financial sense than a business credit card.

When Should you Use a Business Credit Card?

Side hustles are becoming more widespread in people’s daily lives. Many people see these gigs as crucial to their overall financial well-being. According to Bankrate’s 2023 Side Hustle Survey, nearly two in five (39 percent) U.S. adults do something on the side to generate additional money (i.e., a side hustle), and 33 percent of those with a side job rely on the revenue for normal living expenses.

Even if you already have a second job, you may feel compelled to boost your income to keep up with the rising cost of living. If you’re looking to expand your side hustle, you might consider getting a credit card for your business. Here’s how to determine if it’s time:

You have substantial startup costs

Depending on the type of side gig you begin, you may need to invest some money to get it started. For example, if you want to rent out a room through a service like Airbnb, you may need to prepare it first. New bedding, furniture, and a fresh coat of paint can cost thousands. Perhaps you wish to create and sell jewelry, clothing, crafts, baked goods, or other products on an e-commerce platform. If so, you may need to acquire merchandise and create a website.

Instead of starting small and waiting expansion until you can raise the necessary funds, apply for a top small company credit card. While you may not have sufficient funds at your disposal, a bank undoubtedly does.

Once you’ve determined how much you’ll need to get your firm started, you may look for the best business credit card to acquire those products, as long as you can afford the monthly payments. If you have substantial beginning costs, for example, you might select the Capital on Tap Business Credit Card, which gives a credit limit of up to $50,000.

While we consider it one of the best business credit cards with no annual fee, the variable APR may be significantly higher than the typical credit card interest rate. As a result, this card is only suitable as a financing option for people who qualify for a very low APR due to their excellent credit.

Your operating costs are growing

As your firm increases, so will your running costs. For example, if you launched a side hustle of keeping your neighbor’s dog for $100 per week and it’s going well, why stop with just one? You could increase your earnings by adding frequent clientele. However, there are additional costs associated with pet-sitting, such as insurance, supplies, petrol to pick up other dogs, and even ads.

When you ask yourself, “Do I need a business credit card for my side hustle?” the answer is yes if you intend to scale up and want finance to meet your side hustle’s growing needs. When your operational expenditures are expanding alongside your side employment, consider a company credit card that pays significant points as you spend on the things involved in the business.

For instance, the Ink Business Cash® Credit Card offers 5 percent cash back on the first $25,000 combined spending on:

• Office supply stores
• Internet services
• Cable services
• Phone services

If you’ve been shouldering your business’s initial startup costs with your personal cards, getting a business credit card for those increasing operating costs can be an excellent idea. Not only can you earn rewards, but you’ll also build business credit and be able to keep your business and personal finances separate.

Or, maybe you got a bare-bones credit card to start your business, but now that you’re generating more income, you want a higher-end credit card with better perks and rewards. As a business owner, it’s good to periodically assess your financial tools to make sure they’re still the best option for you.

You’re traveling more

Perhaps you have a side gig photography weddings and other events, and your clients are spread across the country. Or you’re channeling your passion for adventure into writing about exotic locations for media outlets or your blog. A top business credit card that offers travel rewards could be a valuable addition to your wallet.

Analyze your travel requirements and obtain the business card that will help you keep expenditures to a minimal while making your excursions more enjoyable. Some are good for airfare, while others are best for hotel, auto rentals, and gas.

There are plenty of cards to choose from — for example, if you are dedicated to a specific airline, consider credit cards that have partnerships with them, such as Delta SkyMiles® Gold Business American Express Card, which awards 55,000 bonus miles after you spend $4,000 in purchases within your first six months of account opening and features a free first checked bag and priority boarding.

You need short-term financing

The last thing you want to do is pay interest fees while attempting to generate extra money to make your life easier. So you might want to look into a business credit card with a 0% introductory APR.

With such a card, you can carry over a balance for a predetermined number of months without worrying about interest accruing on the amount owed. There will be no financing fees if you pay off the entire loan before the standard rate enters into effect.

This feature can save you a tremendous amount of money. Some of these intro offers are for longer periods, such as the U.S. Bank Business Platinum Card*, which offers a 0 percent intro APR on purchases and balance transfers for 18 billing cycles (with a 17.24 percent to 26.24 percent variable APR thereafter). It has no annual fee, too.

There are also times when you may prefer to borrow a fixed amount of money and then pay in even monthly installments. If so, a loan through the Small Business Association (SBA) may be a smarter choice. With the SBA’s 7(a) Small Loan program, you can borrow up to $5 million, an amount that far exceeds the line on most business credit cards, and pay it off over several years.

Final Words

Applying for a business card is easier than you might think. The one major barrier to entry is that you will almost always need good credit, which is generally a credit score of at least 670.

For most small business credit cards, you don’t need a registered LLC or corporation to apply. Instead of a business tax identification number, you may list yourself as the sole proprietor and use your Social Security Number rather than a tax ID number. You may have to list the type of business you have and the date you started.

As with all credit cards, you will also list your income and basic expenses. Chances are your side hustle earnings qualify, as issuers consider a large variety of income-producing ventures. What is important is that you have enough money coming in to handle your expenses and the payments associated with the account.