A credit card fundamentally operates as a revolving credit line. The cardholder uses it to pay for purchases or bills and pays it off monthly. There are many reasons to get a credit card and many advantages that come with one, whether you’re using it for personal or business expenses. Here are six practical ways you can use a credit card for your business.
1. Earn Certain Rewards
Most credit cards offer rewards and incentives to open accounts and use the cards. Business credit cards are indistinguishable. Some of the most common types of rewards include airline miles, hotel points, cashback and transferable points. Many card companies also offer new account promotions, such as cashback and points bonuses or zero or lower interest rates for a set period, at certain times of the year or for applicants who meet specific qualifications. Business credit cards may come with additional rewards, including no additional cost for employee cards, extra points for certain business expenses and no preset limits on spending.
2. Use It for Advertising
Among other things, you can use credit card advertising. A card can be used to finance any and all aspects of advertising, including conducting market research, developing marketing strategies and advertising campaigns, creating ads, running advertising accounts and developing social media content. Some business owners choose to use the same business credit card they use for other expenses, but you can also use a credit card designed specifically for advertising. Such cards may have features such as enhanced security and high spending limits.
3. Balance the Expenses You Use It for
A business credit card can be a useful asset if you utilize it for appropriate expenses. Remember that it is a source of funding for your business expenses, not a personal line of credit. This means you or your employee cannot use it for personal reasons without a good reason. Make sure whoever uses a business card keeps a record of his or her purchases and why those purchases were made. You should also factor business credit cards into your operations budget to ensure you can afford the monthly payments. Ideally, you should use a business card for some expenses, but it shouldn’t be your only source of funding.
4. Separate Business And Personal Expenses
Keeping business and personal expenses separate is particularly important for small business owners and those running startups. If your business and personal expenses are too closely intertwined, you risk them impacting each other. For example, if your personal credit score is low, you may find it difficult to get your business approved for loans and vice versa. However, if you use tools such as business credit cards, you will have a much easier time keeping your expenses separated.
5. Build Your Business’s Credit Score
Not only can you use credit cards to build your credit score, but you can also use them to build your business’s credit score. Even for small business owners, their personal and business credit scores are separate, so it’s important for you to keep both healthy. Credit cards are useful for improving credit scores because the account holder’s payment history and debt levels are recorded and reported on by the lender. This means the business credit bureau generating your business’s credit report will be able to review your debt management and whether you make appropriate payments on time.
6. Provide Employees With Cards if Necessary
Depending on the size of your business, you may develop a corporate credit card program for employees. Under these programs, certain employees may be issued credit cards to use for business-related costs. Many companies offer these cards to managers, supervisors and employees who travel for significant periods of time, such as sales representatives. These employees can then use the cards to bill your business directly for these expenses, rather than
using their personal finances, which would require reimbursement. These programs should be structured so that only employees who require corporate cards can access them.
Businesses of all sizes can take advantage of business cards. If you run a small business, you may only need one. By contrast, larger companies may provide a program that equips certain employees who need them with corporate cards. Whatever you need a business credit card for, make sure the