By Daniel Lewis,
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Running a business comes with an array of financial implications, and it can be tempting to make use of your personal payment cards to keep the cash flowing, especially in the early stages.

However, it is always advisable to set up separate accounts which are business-specific. This is especially true of credit cards, so here is a look at the benefits that come with having one as a business owner.

Draw a line between personal spending & business expenses

From a purely administrative point of view, if you are making business purchases on your personal credit card, it becomes a headache when you need to file your taxes and work out how much of your spending is deductible.

It is far simpler to compare credit cards with iSelect, get a card for business use only and put all of your expenses on it. That way you will always be able to track your business-related spending, and have a much simpler time when filling out a tax return or providing documentation to your accountant.

Secure a larger credit allocation

Business-focused credit cards can be available with a greater credit limit than personal cards, which is obviously useful if you are going to be making major one-off purchases on a regular basis.

Likewise if you have already approached the limit of your personal credit allocation, being able to have an entirely new line of credit in the name of your business will be a good short term solution to cash flow snafus.

Leverage unique features

Credit card packages built for business users tend to go above and beyond with features and functions not found on consumer-grade deals.

For example, you may be able to add multiple cards to the same account so that employees can access your line of credit. And of course each additional card can be equipped with its own specific limit, so that you can manage spending accordingly.

You could also be eligible for perks and bonuses just for using your credit card. This is not unusual in the consumer market either, but here these benefits will be tuned towards the types of spending those businesses will often rack up, whether that is on stationery, materials, or anything else.

The best business credit cards will be tuned to offer in-depth data for the purposes of filing tax returns, as well as for generating internal reports that can be used to track and optimize spending over time.

And of course there may be incentives for new business customers who commit to a deal with a particular provider, such as not having to pay interest on business-related purchases for the first year of use.

Avoid credit score conundrums

One often overlooked issue that can arise if you use a personal credit card to pay for business expenses is that this might negatively affect your credit rating, especially if you miss a payment or exceed your limit regularly.

In contrast, with a business credit card you can enshrine your personal credit score and avoid the financial ups and downs of your company from harming your chances of being eligible for things like home loans.

Not every business credit card package will afford you this separation of score-keeping, so be sure to read the small print before you commit.

Final thoughts

While business owners might not be legally required to have a business credit card, there are so many sensible reasons to take this step that it should be considered a necessity.

Of course you don’t need to rush into picking a card for your company; it is better to compare deals from reputable brands carefully before coming to a conclusion.

Daniel Lewis
Daniel Lewis
Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.

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