The benefits of a small business credit card


You don’t need to have your own practice to qualify for a small business credit card.

Whether you’re employed by a large corporation or have your own practice, opening a separate credit card account for business expenses makes sense for several reasons. It can streamline record keeping, simplify tax preparation, and even put cash back in your pocket.

What else, you don’t need a traditional business open a small business credit card. These accounts are generally available to those working as sole proprietors, including freelancers, consultants, and contract workers. This means that if you own your own practice or work on the side, you are likely eligible for a small business card.

Here are five reasons why you should consider applying today.

1. Keep personal and business expenses separate

The most basic reason to get a small business credit card is to separate your personal and professional finances. Not only will this make tax time easier, but it will also provide an accurate record of the actual expenses you incur at work. This information is crucial for setting rates and requesting refunds.

As a bonus, having a small business credit card means you don’t have to worry about business expenses affecting your personal credit score. Since business lines of credit aren’t usually reflected on personal credit reports, they won’t factor into your credit utilization rate, which is important if you have heavy business expenses. .

That said, remember that your personal credit usually serves as collateral for small business credit cards, so spend wisely. If you owe money that your business can’t repay, the card issuer can sue you personally.

2. Manage cash flow

Business income can be irregular and unpredictable. In addition, it may happen that customers do not pay on time. If you try to collect all your expenses, you could find yourself short of funds or short of resources at various times.

Having a small business credit card behind the scenes can help smooth out the hills and valleys of your income and cover any financial gap between when your expenses arise and when your income arrives. As long as you pay the balance in full by the statement due date, you will not pay any interest charges.

Consider this example: your work computer crashes on June 5, you run out of it, and spend $1,200 to buy a new one, charging it to your small business credit card. The billing period for this card ends on June 25, but your due date isn’t until July 17. It’s almost six weeks AFTER you bought your computer. As long as you repay the entire balance by the July 17 due date, you can consider this as having taken out a six-week interest-free loan.

If you need more time to pay off your purchases, look for a card with a 0% initial APR or a low ongoing interest rate. Another option is to get a rewards card so that cash back or other perks offset the cost of your line of credit.

3. Earn rewards on your daily business purchases

Speaking of which, don’t overlook the value of credit card rewards as a reason to open a small business credit card. Some cards offer welcome bonuses worth up to $500 in cash or $1,000 in travel rewards. This can make them useful even if you don’t expect to use a credit card regularly.

However, many of the best small business credit cards today offer great rewards on everyday business purchases, which means you might not want to put the card away after earning the welcome bonus. For example, cards can offer 5% cash back on office supply purchases or extra points for business travel expenses. In fact, you might even benefit from considering holding a some additional cards and use them strategically to maximize rewards.

Earning these rewards can free up money in your budget to spend on other needs and grow your practice.

4. Access to business card tools and benefits

Small business credit cards often come with additional perks in the “fine print” beyond the rewards they openly tout. Depending on the card, these may include the following:

  • Extended warranty
  • Car Rental Collision Damage Waiver
  • Mobile phone protection
  • Free checked baggage
  • Travel upgrades

If you have employees, you may be able to request cards for their use. Some cards also offer convenient mobile apps and online account management tools to review spending, add notes, and generate reports.

Going back to our previous example of purchasing a new computer, if you used a credit card for the purchase that includes extended warranty protection, you can rest easy knowing that your computer manufacturer’s warranty will automatically be extended for a year or more simply because you used your credit card to purchase it.

So go ahead and say “No, thanks” when the electronics store offers to sell your extended warranty plan.

5. Build trade credit

As with personal credit, having a strong credit history for your business can provide access to better cards and secure more favorable loan terms. Opening of a small business card and making timely payments is key to ensuring you’re able to leverage the credit you need as your cash flow needs grow.

Be aware that you will only accumulate business credit if you have an Employer Identification Number, known as an EIN. These numbers are issued by the IRS to businesses of all kinds, even sole proprietors. If you are a sole proprietor and use your social security number to apply for an account, having a small business card will not create a separate business credit history.

Even if you don’t think you need a small business card, you could probably benefit from it. As you grow your practice or consider taking on contract work, take a closer look at how a distinctive business card can make it easier to manage your finances while earning valuable rewards.


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