Being a small business owner, you must have possibly received various offers and applications for a business credit card. But you must be wondering that what makes them different from other credit cards and why you need to get one?
What is a business credit card?
A Business credit card is intended for use for business purposes instead of personal use. It is accessible to businesses of all kinds and sizes, including single proprietor ships, and they do not appear on the cardholder’s credit history or have an effect on an individual’s credit score. However, if a company fails to pay back its credit card bills, the business owner might be held responsible for the debt, depending on the terms of the credit card agreement.
Let’s go over some of the most compelling reasons why you need a business credit card
Extends your Available Credit
Your business growth might be stymied by using a personal credit card for business expenses as you may have less existing credit available for family expenses because you would have already used that credit to meet your business needs or vice versa
Co-mingling your personal credit card could jeopardize the privacy and protection of your corporate veil. Getting a business credit card which will be solely used for company expenses will eliminate the risk of co-mingling your personal credit.
Maintains Accurate Records of Business Expenses
For running a successful firm, it is necessary to have accurate records of business expenses and purchases and it can save you a lot of time of separating your personal and business expenses. Most business credit cards give detailed reports of your expenses and break down your purchases by category, making it easier for you to plan your budget accordingly and check tax deductions, if applicable.
Builds creditworthiness of your Company
If you have a business credit card then you will have a separate business credit history. It establishes creditworthiness for your company which in turn opens up many funding opportunities. It is also important in reducing the reliance of your personal credit to be eligible for business funding. Many small businesses often get rejected on their loan applications or get unfavourable loan terms because they don’t have a credit history. Getting a business credit card not only helps you in establishing a credit history but also prevents your business related debts to show up on your personal credit reports
Helps you to control employee spending
When your business grows and headcount increases then delegation becomes a critical task. If you need to give your employees certain authorities and don’t want them to approach you for small decisions but you need control over important business finances then you could get a business card for your key employees with credit limit in place. You can easily monitor each card and get instant notifications for every purchase they make.
Best Business credit cards in India
|State bank of India (SBI)||SBI Platinum corporate credit card|
|HDFC Bank||Business Moneyback credit card|
|Axis Bank||My Business credit card|
|Citi Bank||Citibank Corporate card|
|Kotak Bank||Corporate card|
|Standard Chartered Bank||Business Gold card|
|Allahabad Bank||Laghu Udhyami credit card|
|ICICI Bank||ICICI bank corporate card solution|
The Bottom Line…
Business credit card is one of the most convenient options that business owners might want to consider when they are choosing financial resources and tools. But before applying for a business card, ensure that you understand all the terms of usage, various costs, and rewards you will get and have a proper system of managing the usage.