A Beginner’s Guide to Business Credit Cards
Most people have heard of business credit cards, but few people know exactly what a business credit card is. A business credit card is a credit card that is used in the name of a business instead of a person. This means that all debts on the card are done from the perspective of the business as a legal entity. This separates the charges from the actual individual who uses the card in the name of the business.
Business credit cards are available for businesses of all sizes. From small businesses to large companies. In addition, the charges do not show up on any individual credit reports. However, if the business is unable to pay its balance, then the business owner will be liable for these costs.
The Benefits of a Business Credit Card
A business credit card offers benefits meant to entice its business customers. These benefits will differ from those offered for individual customers. As an example, certain business credit cards will offer cash-back for purchases from stores that businesses frequent. A business credit card will also usually offer a larger sign-up bonus compared to the individual sort. This is due to the higher levels of expected spending.
On top of offering the normal conveniences that are associated with personal credit cards, a business credit card will help a small business in particular to maintain a distinction between personal and business spending. The separation in spending is extremely important for tax and accounting purposes. They also give employees a simple means for making purchases for the business and for a business to monitor these purchases.
The Disadvantage of a Business Credit Card
Any business that needs to borrow for longer than the interest-free period offered by a credit card should look at alternative sources of financing. A credit card is usually the most expensive option when compared to other business loans, such as lines of credit and bank loans.