Not all credit cards are created equal. Putting your company’s spending on a personal credit card may seem handy at the moment, but utilizing a business credit card might save you time and money in the long run. Continue reading to learn why your company needs a corporate credit card.
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Keep your personal and business finances separate.
When you combine personal and corporate costs, you put yourself at danger. For example, if a creditor sues your company for fraud, the owners may be held accountable, putting the owners’ personal assets at risk. Having a business credit card in the name of your company prevents you from breaching the “corporate veil.”
Combining personal and company funds puts you in danger. If a creditor sues your company for fraud, they may hold you personally accountable, putting your personal assets at risk. Having a credit card in your company’s name may safeguard you by keeping this “corporate veil” intact.
Maintain a Record of Business Expenses
Keeping track of your company purchases is essential for legal and tax purposes. Putting all of your company purchases on a business credit card will help you keep track of all of your spending. Some corporate credit cards even have their own expenditure management system. This is extremely useful for budgeting and calculating tax deductions.
Some credit card issuers may let you create cards for your staff to use. These employee cards are linked to the same account as the original card and are occasionally free to add. When you recruit a new employee, you will already be able to include them in your company costs.
Increase Your Credit Limits
Small business purchases may be possible with a personal credit card, but what about greater expenses? Businesses often have higher costs than the regular consumer. For bigger expenditures, most credit card providers may even increase the credit limit on a corporate credit card. A bigger credit limit on a corporate credit card might also benefit your company’s credit score.
Create Business Credit
Using and keeping a business credit card might benefit your company’s credit reputation in the long term. If you pay your payments on time and avoid paying excessive interest rates, your company will be more likely to get greater credit limits and potentially have an easier time obtaining a business loan.
Even though a business credit card will help your business credit, your personal credit score is important. Most company credit cards need a good personal credit score to demonstrate financial responsibility. After you get a company credit card, credit card firms will report to business credit agencies. However, some businesses will also report to consumer credit agencies.
Earn Company-Specific Rewards
Business credit cards typically provide rewards for business-related purchases. Rewards programs are available on both business and personal credit cards. Nonetheless, personal credit card rewards may be limited to consumer categories such as grocery and restaurant expenses. Credit card companies create business credit cards with the needs of businesses in mind. Some cash back programs may award points for transportation or marketing expenses.
For example, a company that travels often may want to consider a business credit card that gives airline miles and cash back on travel costs. A firm that sells things online may discover a business credit card that provides cash back for delivery.