If you have recently started running a small business, then there is no doubt that you have also started considering the idea of getting a credit card for that particular company. Okay, there is a chance that this thought hasn’t crossed your mind before and that you have just now realized that you have the possibility and the opportunity of doing that, which is also perfectly fine. It’s not like you can be too late with it. Well, of course, some things are better done sooner rather than later, but you should also remind yourself of the fact that “late is better than never”, meaning that you shouldn’t get discouraged if you believe that you are a bit late when it comes to switching to this particular card.
In case this is the first time you are hearing about this option, however, then you are probably quite confused about the entire idea, meaning that you still don’t know whether you should switch to it. In short, you might not know what business credit cards are, how they work, why you need them and how to get them if you decide to do so. Those are undeniably some rather significant questions and I think it is time for you to get your answers, which is precisely why I’ve decided to make this my main topic for the day. So, below you will find a guide to these cards, i.e. a credit card 101 for small business owners, meaning that you will get a completely clear idea not only on what these are, but also on how they work, why you might need them, as well as how to get them.
Here’s an intro to the topic: https://www.businessnewsdaily.com/26-small-business-credit-cards.html
To be even more precise, I am now going to answer those significant questions for you – the questions that we have briefly mentioned above. Once you get your answers, you will manage to create a clear picture in your mind as to the value of these financial instruments and you’ll be ready to decide if your small company should start using them or not. So, get comfortable and start reading, because your questions are about to get answered and that is precisely what you want.
What Are Credit Cards For Businesses?
I suppose you are not surprised to find out that we are going to begin with this particular question, as it is basically the most obvious starting point. After all, you cannot start learning anything further on these financial tools if you don’t even know what they are in the first place. That would be like starting to drive without knowing what a car is. Okay, that might not be the best comparison, but I assume you get where I am getting at with it. In simple words, you need to get your facts straight and understand what credit cards for businesses really are.
Basically, these cards were designed to assist companies in handling certain expenses and in general funding. We could say that they function just like the personal cards, but with a few crucial differences that make lives easier for business owners. For starters, the spending limits are higher and there are a lot more benefits that you can expect to get once you start using them, such as rewards and similar things.
Since I’ve mentioned those benefits, it is only logical for me to tell you about a few of those before we go any further. In addition to higher credit limits that I’ve mentioned, these financial tools for companies allow you to easily separate your business expenses from your personal ones. Furthermore, they offer benefits such as purchase protection, merchandise discounts, extended warranties and similar things. There are also some travel related perks that you should know of and, of course, you should be aware of the fact that these have an overall positive effect on businesses. Check out some signs that your company is ready for this card.
How Do They Work?
So, it’s now probably perfectly clear to you what these particular cards are, meaning that it is time for us to move on to the next important question. That is the question of how these precisely work and I suppose that you already have an idea about that, since it is all rather simple and there’s no need for us to make a philosophy out of it. In the general sense of it all, these cards work just like personal ones. Only, instead of generating personal expenses, you will actually be spending money on your company.
The important thing to remember here is that those company expenses are actually tax deductible, which is, without a doubt, one of the reasons why small business owners get them in the first place. When you separate your personal and your company expenses, it will be much easier for you to understand what it is that’s deductible. Plus, it will also be easier for you to get a clear idea on how much you are spending on your company.
In addition to all of that, you should also know that these cards usually don’t affect your personal credit score, which is another amazing thing in the way they work. Of course, this might not always be the case and it actually all depends on the issuer, which is why you need to set the record straight before actually applying of a credit card for your business and before starting to use it. Once you’ve checked out all the terms and applied for your card, you’ll simply need to wait to get it and then start using it. That’s how these instruments work and I suppose you see that there’s nothing complicated about the process at all.
What you should always remember is that these financial tools should only be used for your business expenses, since you don’t want to complicate your life by using them for some other things as well. Your employees can use them as well when they are, for instance, on business trips or when they need to buy some things for your company. You should also take the interest rates into account and you will be glad to hear that some of the issuers offer the interest-free solutions, which is undeniably a huge benefit.
Why Would You Need Them?
While the question of how these work was important for you, there is one thing that you are probably more eager to find out. In short, you are wondering why you would need these cards at all and I can understand if you might not be sure about the reasons, especially if you are new to the entire game. Can’t you just use your personal card to cover all of the business expenses that will arise and be done with it? Why would you complicate your life with getting a separate card for your company?
Well, if your plan is to just use your personal card for this, I can tell you right away that nobody will stop you from doing it and that you can easily do business that way. Yet, the idea that you are complicating your life by getting a dropshipping credit card, for instance, if that’s the business you are running, is quite wrong. To put it simply, you would actually be complicating your life if you continued using your personal card for all those business expenses, and you would be complicating it in several different ways.
For starters, there is the fact of the lower credit limits that are usually offered by those personal cards. Sometimes, those limits are not enough to help you cover all of the expenses you have. Even if they are enough, though, it will be rather difficult for you later on to clearly separate your company expenses from your personal ones, and we have already made it perfectly clear why that is so important. Let me give you a reminder. Company taxes are deductible, which is why this separation is significant.
Apart from all of that, there are a lot of other benefits that you can expect to get from a credit card for businesses – benefits that you won’t be able to receive if you simply continued using your personal one to cover the expenses that will arise. I mentioned a few of those above, such as rewards and cashbacks, and you should always look into the offered benefits before applying for any of these cards. Plus, there is also the fact that some issuers offer interest-free options, which is undeniably a huge benefit to be aware of. The bottom line is that using these is far more beneficial for small businesses than sticking to the personal ones.
How To Get Them?
I suppose that you have by now clearly understood how these credit cards for businesses work, as well as why you might need them. So, it’s now time for us to answer another significant question that you certainly have. That is the question of how you can actually get these cards for you. The good news is that the process is quite simple, especially today when the technological developments have allowed us to do basically everything online. To cut to the chase, this is something you can do online as well, which means that you’ll get to do everything from the comfort of your home and without needing to visit any financial institutions in person.
As explained, the process is quite simple. You just find the issuer that you believe could be good for you and you apply for their card. Since you’ll be doing this through a website, you will have a set of steps you’ll need to follow when filing the application and the great thing is that those steps will be clearly outlined, meaning that you won’t need to worry about doing something wrong and about making mistakes in the process, as that is highly unlikely to happen. So, just sit back and start the application process, then follow the necessary steps and file the application. Once that’s done, you’ll simply need to wait to receive your card, and that probably won’t take long, although it depends from issuer to issuer.
How To Find The Perfect Issuer?
Since I’ve mentioned a few times that quite a lot of different things depend on the issuers, you are probably starting to wonder one specific thing. In short, you want to know if there is anything you can do to make sure that you are working with the perfect issuer. To say it differently, you want to know how you can find the perfect issuer for you, and I can tell you right away that this is a process that you’ll have to take slowly and that you’ll have to pay a lot of attention to. In other words, don’t make any hasty moves and choices here, since that could lead to you ending up with a not-so-good card issued by a not-so-good company, and I suppose you do understand why that’s not a favorable solution for you.
So, it is clear that you will have to put quite some effort into finding the perfect card issuer for your company. If you, however, don’t know how to do that, i.e. how to search for these companies and how to pick the best one for you, let me give you a few hints which will be of help. For starters, you should always check their level of experience, because the fact that some companies have been working in this line of business for a long time tells us that they offer some great quality services.
In addition to experience, you should also check the reputation of these firms, because you want to work with a highly reputable firm. Of course, you should also check out the interest rates and any other fees that might be associated with the card that you are thinking of getting. Once you’ve checked everything thoroughly out, you’ll be ready to make a choice.