Smart Ways Entrepreneurs Use Business Credit Cards
Business credit cards help startups and small businesses finance operations and manage cash flow. Business credit cards also provide a number of other benefits from fraud protection to credit score building.
Here are a few smart ways of using your business credit card:
Building Credit Score
By using a business credit card to consistently make purchases that you can reliably pay back on time, you can build a strong business credit. By building your business credit, your business becomes a better prospect for other funding sources.
Since business credit cards usually evaluate your personal credit score to determine if you qualify, business credit cards can help finance new businesses who do not have access to other types of funding. For startups that do not require significant cash infusions to get off the ground, a business credit card can be used to bootstrap your startup.
Business credit cards provide fraud protection services. Under federal law, cardholders are not responsible for more than $50 dollars in fraudulent charges. This can be especially helpful for foreign transactions, as it is very difficult for a small business to go after an international claim if they got taken advantage of.
By using a business credit card, you safeguard your credit rating and business assets while making it on a lean budget with minimal cash flow.
Rewards and Benefits
Business credit cards can have any number of rewards, including travel perks and point purchases. Rewards can range from redeeming points for hotels, gift certificates, office supplies, and entertainment packages. Business travel credit cards issued by a specific airline can offer unique rewards such as priority boarding, free checked bags, and travel miles.
Business credit cards may offer collision damage waiver coverage when your primary coverage is to rent a car. Some offer secondary coverage after your normal auto-insurance. Some business credit cards may also reward you with cash rebates on purchases, which can be deposited into your business account or applied to other credit card payments.
However, cards with the most enticing rewards will likely have higher fees.
Control Employee Expenses
Business credit cards let you track your business purchases with an itemized statement showing what each cardholder has spent and in what category. This allows you to track employee spending, organize types of purchases, remotely stop unnecessary purchases, and manage credit card acceptance/cancellation.
Separate Business and Personal Expenses
It is important for tax reasons that you separate your business and personal expenses. By doing so, you will be able to see your yearly expenditures and deductions in one place.
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