Why Using Small Business Credit Cards to Finance Your Business Is a Good Idea – A Robert Trosten Investigation

As convenient they are, credit cards, at the first sight, do not appear to be an ideal way of financing your small business due to their steep rates of interest, exorbitant late fees, and short credit periods. However, the truth is that by planning properly and using them wisely, small business credit cards can help you to run and grow your business profitably.

Small Business Credit Cards, Explained by Robert Trosten

Even though you can use your personal credit cards to buy whatever you need for your business, using a credit card that is specially designed for small business owners has its advantages. Firstly, you earn cashback even on the purchase of office supplies and other stuff that a startup operation requires. Secondly, the business cards make available an array of online tracking tools and reports that can help you to track your expenses. Business owners can freely add multiple users so that employees can also use it to pay for business expenses.

Top Reasons for Using a Small Business Credit Card

Better organization of your business expenses: By using a business credit card, you can separate your personal expenses from that of the business. It not only makes business accounting simpler but also makes it easier to provide clarifications to the IRS. Many issuers of business credit cards also give you access to your transactions online that you can use to feed your accounting software and avoid the hassle of having to enter all the records into the system manually. You can also set up different limits for individual employees and restrict their access if need be, observes Robert Trosten.

Higher credit limits: A small business credit card will typically offer far higher credit limits in comparison to a personal card. Typically, business credit card limits start with $10,000 and can go up to even $100,000 depending on your use and repayment history. Some cards will also let you exceed your limit temporarily under certain circumstances.

Hefty sign-up bonuses: Because of the intense competition between card issuers, it is not uncommon for you to be offered lots of reward points, airline miles, or even cashback. According to CNBC, some business cards even offer interest-free credit for up to 12 months on your purchases. However, you should find out if the joining and annual fees make the subscription worth it.

Specific rewards: Some business credit cards will offer more reward points or cashback on specified transactions like purchase of office supplies, phone and internet services, and other purchases like fuel. If you know what you spend more on, you can pick the right credit card.

Conclusion

By using your small business credit card carefully, you can boost your business credit score that will make it easier for you to access more credit in the future. You need to take care that you make the repayments on time and your credit utilization stays below 30% of your credit limit. You also need to keep in mind that you remain personally liable to repay the credit card dues even if your business takes a hit.