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Understand the basics about business credit cards

If your small business is starting to grow, then now might be the perfect time to consider expanding your financial options with business credit cards. A business credit card is simply a form of credit card designed for use by a business instead of a single individual. Business credit cards are available for companies of all shapes and sizes, including sole traders, and they don’t show up on your personal credit report, or affect your credit score. However, if your business can’t pay its credit card bills, then you might be held liable for the debt you encounter.

Business credit cards typically come with a range of unique benefits carefully designed to entice and attract business customers. Sometimes, these benefits can be different to the options offered to individual customers. For instance, some business credit cards will offer cash back at certain stores.

The question is, with so many different financial options out there to choose from, how can your company make sure you’re selecting the perfect business credit card?

1. Understand the Basics About Business Credit Cards

Before you can start to choose the ideal credit card for your company, you’ll need to make sure that you understand the basics of how these financial vehicles work. For instance, business credit cards should only be used for expenses that are paid for by the business. No personal spending should be allowed on your business credit card whatsoever. Additionally, there are no CARD Act protections available for business credit cards, which means it’s crucial to pay your bills in full, and on time.

Because they’re designed to help emerging companies grow, many business credit cards offer higher amounts of credit than personal credit cards. This is useful if you’re planning on making a large number of purchases each month. Additionally, if you hire people in your company, then you might be able to give them credit cards, and keep an eye on their spending.

The more you know about the terms and conditions around having a business credit card, the more you can make an informed decision about which one is best for you. Speak to a bank or financial expert if you need additional guidance.

2. Figure Out your Business Cash Flow

Looking over your books and getting a general understanding of how you’ve spent money for the last six months could help you to determine what kind of credit card you need, and which rewards could be most beneficial for you. Once you have an understanding of your spending habits, you can search for a credit card that provides plenty of rewards in all the right places.

For instance, if your business involves offering a lot of customer support to your clients over the phone, then you might spend a great deal of cash on your phone service. However, there are some business credit cards out there that provide bonus cashback on purchases around telecommunications and broadband. Choosing to one of these specialty business credit cards could mean that you not only end up saving more money on your business expenses, but also that you improve the financial health of your company too.

Additionally, an understanding of your cashflow might give you a better idea of what kind of credit limits you need to have on your card. If you generally need to make big purchases for materials and supplies at the beginning of each month, then you might need a credit card that allows for this pattern of spending.

3. Examine the Business Lifestyle You’re Trying to Create

While looking into how and where your business spends its money is important, it’s also crucial to think about what your employees need from your company when selecting business credit cards that give you the most beneficial selection of rewards to choose from. For example, if your employees and you generally do a lot of long-distance traveling on the behalf of your organization, then you might need a card that allows you to redeem bigger rewards on hotels and flights.

On the other hand, if you frequently find yourself entertaining important clients at restaurants and bars, then you could consider working alongside a financial advisor to find a credit card that offers better deals on entertainment packages. You can even find business credit cards that help you to save money on gas if you and your employees spend a lot of miles behind the wheel.

4. Decide Whether Your Card Should be Free

When it comes to choosing business credit cards, it can be easy to convince yourself that you shouldn’t settle for anything less than a set of benefits that come with no annual fee whatsoever. However, there are many business credit cards that ask you to pay a premium once a year to help open up new doors to additional advantages for you and your company.

Don’t simply disqualify these cards without at least considering them first. Because these cards often come with higher reward rates, paying the extra fee can sometimes be worthwhile. The only thing you need to do to determine whether paying for your card is the right decision for you, is a little bit of careful math.

Think about how much money you could save, in comparison to how much you have to spend to get the card you want. If the rewards are bigger than the expense, then you know what to do!

5. Narrow your Choice Down by Perks

Eventually, you’ll be able to whittle your choice of available business credit cards down to just a few. To help you make that final decision, you might want to think about some of the fringe benefits offered by the top players in your selection. Sometimes, although these additional perks don’t seem like much to begin with, they can help you to make the right decision at the end of the day.

For instance, if you’re not sure how to finance a big purchase for your business, choosing a credit card that allows you to access an introductory period with a 0% APR can be a great way to ensure that you get access to everything you need without putting too much of a dent in your cash flow.


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