Why Every Small Business Owner Should Consider a Business Credit Card

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A small business credit card can be an asset for a new business owner. Keep reading to find out which perks could be most beneficial. [[{“value”:”

Going into business for yourself could well be one of the most rewarding moves you ever make. But starting a small business is about more than just being your own boss — there are a lot of financial considerations to make to ensure you’re set up for success and ready to see money pile up in your business checking account.

For managing your day-to-day expenses when you strike out on your own, it’s worth considering opening a business credit card. Here are a few reasons why, and a few tips to choose the right business credit card for you.

Separate your spending

This is easily the most sensible reason to get a small business credit card, even if your business structure is a sole proprietorship, like mine. Keeping close track of your business spending vs. your personal spending makes tax time far easier, and using a credit card for your expenses offers some of the easiest record-keeping possible. Want to know what you spent on supplies or marketing this month? Log into your credit card account and download a statement. It’s as simple as that.

Benefit from business-centric bonus categories

Personal credit cards often come with bonus rewards categories that are more geared toward the kind of spending you’d do to maintain your life, rather than your business. For example, I have credit cards with high rates for groceries, gas, dining out, and travel expenses.

But bonus categories for business credit cards often work a bit differently. Rather than higher rates on dining or grocery purchases, you might get a higher rewards rate on internet or cellphone service, online advertising, or office supply store purchases. This means you’ll earn more rewards or cash back on business-specific expenses.

Take advantage of short-term financing

A business credit card can offer a very accessible means of financing big purchases. If you are, say, opening a restaurant, you might need to seek a business loan to fund your equipment purchases. But if you’re getting started as a freelance writer, your equipment needs might only consist of a new computer.

If you don’t have the funds on hand to buy one, you could finance the purchase by opening a business credit card with an intro APR offer that lets you pay off your new computer over time while paying low or no interest. Just be sure you can in fact pay off the purchase out of your checking account within the allotted time — you can do some easy math to find out.

Let’s say you have 12 months to pay off your new computer without interest, and it cost you $1,000. As long as you make payments of at least $83.33 per month, you’ll have it paid off in time.

How do you choose the right credit card for your business?

Since there are so many options out there, use the following quick tips to pick the business credit card best suited to your needs.

Pick a card type: Do you want a card that earns cash back (directly saving you money on credit card bills) or one that earns rewards points or miles you can redeem for travel?Consider the annual fee: While you can get a business credit card that costs nothing to keep in your wallet, some of the options with better perks and higher earning rates have an annual fee.Look for the right rewards: If a card’s highest bonus rate is on office supplies, and you don’t buy any, that’s probably not the right card for you. Target one that matches your spending.Watch out for the APR: Some cards have a higher go-to interest rate than others. If you ever carry a balance, these cards could cost you a ton of money in interest charges.Find employee-friendly features: If you have staff members who will need a card, choose one that offers free cards for employees. Some cards even let you add a spending cap to individual cards so an employee can’t max out your credit line.

For the rundown on your options, check out The Ascent’s list of the best small business credit cards.

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