When first starting a business, many entrepreneurs begin using a personal credit card for expenses. It’s the path of least resistance.
However, once the business starts to thrive, you will garner tangible benefits from using a good business credit card — i.e., a credit card in your business name that is used strictly for business purposes.
Here are advantages that a business credit card can offer your business to help it grow and be profitable.
1. Expands Your Overall Available Credit
If you have ambitious dreams to grow your business, your growth may be stymied by using personal credit cards for business purposes.
Why? You may have less credit available for family purchases because you’ve already used that credit for business purposes — and vice versa.
Having a separate business credit card and separate personal credit card, each with its own credit limits, can give you more potential credit overall for your business and for your family.
2. Establishes Business Credit History
Having a business credit card helps you establish a separate credit history for your business.
Small businesses often get turned down for loans or get disadvantageous loan terms because they lack a credit history for their business. According to Tom Gazaway, founder and CEO of LenCred.com, “from the business owner’s perspective the importance of business credit has increased in recent years and all the indicators point to this trend continuing in the years to come as well. It does depend on the type of financing you apply for but the level of importance of business credit is clearly increasing.”
3. Access to Other Financial Products to Fuel Growth
Part of being a small business owner means constantly focusing on ways to increase the growth rate of your business.
One way to use a business credit card to help grow your business may not be obvious. If you choose a business card with a provider that has a wide range of products that serve businesses, it can be the start of a strong financial relationship.
For example, a company like Chase offers many business credit products. You can gain access to business-sized credit lines — beyond a credit card — to provide your business with more purchasing power and growth.
“Chase offers financial services that meet small business needs no matter where they are in the lifecycle of their business,” said Laura Miller, president of Ink from Chase. “The Ink business credit card offers extended working capital and simplifies the management of everyday financial transactions.”
Chase also offers some of the most innovative business tools out there such as Chase Checkout which helps you accept payments from customers whether you do business in store, online or on the go.
4. Maintains Separation of Business and Personal Expenses
If you have a corporation or LLC, it’s important to treat your company as separate from your personal financial situation. That is important in order to maintain limitation of personal liability, according to Nolo.com. If you intermingle your personal expenses and business expenses, you could ultimately lose the very legal protection you hoped to gain by incorporating or organizing a limited liability company.
Also, for tax purposes, it is best practice to keep your business expenses separated. Only business-related expenses are deductible for a business tax return or Schedule C you file. A business credit card by its very nature will keep business expenses separate.
5. Saves Times through Technology
A business credit card that offers advanced technology does a lot of the recordkeeping work for you.
It makes the process of managing your expense budget easy, with less work on your part to see exactly where you are spending and how much. It also keeps records properly identified for tax purposes, making tax time much less of a headache.
That’s why it’s important to evaluate the technology that your credit card provider offers. The right technology can dramatically minimize the manual work needed to manage your finances.
And it’s not just any old technology to consider. Make sure it’s technology designed for business owners, delivering the right information in the right way for business use.
For example, the Ink from Chase mobile app delivers advanced recordkeeping and analysis tools.
6. Allows You to Delegate Yet Control Employee Spending
As your business grows and adds employees, delegation becomes a critical skill. You want to provide your employees authority and not require them to come to you on minor decisions. However, you need control over critical things such as your business’ finances.
That’s where a business credit card like Ink from Chase is a tremendous delegation tool and management aid. Ink offers free employee cards so you can give your employees the buying power they need within the limits you want. Monitoring each card is easy with the Ink mobile app:
- Set and adjust individual spending limits on the go.
- Get instant alerts for every purchase so you know when and where they’re spending money.
- Free employee cards help you earn rewards faster.
Get more control and rewards with every employee purchase. How’s that for balancing delegation AND maintaining control?
7. Earn Valuable Rewards You Can Use the Way You Want To
Last but certainly not least, consider the rewards of your business credit card.
Most people look at the amount of the rewards they can earn. That is important, of course.
But the proof of the pudding is when it comes time to redeem and use those rewards.
Look for flexibility and ease in redeeming rewards. Is it easy to redeem them online? Can you use the rewards in a variety of ways — including cash back, travel and gift cards?
That’s how you’ll get the most out of your card’s rewards.
Find out more about Ink from Chase business credit cards, including Ink Plus and Ink Cash.