6 Reasons Your Business Needs Its Own Credit Card
Perspective

6 Reasons Your Business Needs Its Own Credit Card

Business credit cards are efficient and versatile “hidden weapons” for your business. Aside from letting you track spending and statements more efficiently (instead of a personal card for each employee), or being given vital detailed reports from issuers categorizing expenses, let’s take a look at more reasons your business will benefit from its own credit card.

  1. Improve cash flow

Whether you’ve just launched a startup, or are a few months along towards getting your new business off the ground… a credit card is a tremendous advantage. So much to the point that they can improve your cash flow when invoices are due. Another way it helps you improve cash flow is by limiting your company’s spending – useful if you have multiple users on your corporate account.

  1. Financial Protection 

Sometimes, businesses are strapped for cash. This happens – and it is, unfortunately, a reality we have to come to grips with. (Before Warren Buffet bought Berkshire Hathaway, it was a textile manufacturing company. He would later go on to be one of the wealthiest men in the world at $84.3 billion.) A business credit card gives you access to funds—strictly for keeping your business afloat—when cash flow is low.

  1. Protection Offers

Listed below are “a few” layers of protection (some) credit cards offer you. As you review this list over, ask yourself if your debit card offers your company these forms of protection.

– Fraud protection prevents you from being liable for the fraudulent purchase. (This is handy should you ever misplace your business credit card.)
Balance transfer credit cards help you to pay off the balances of credit card “A” with another credit card “B.”
– Rental car insurance protection refuses collision damage waiver coverage from (most) rental car agencies. Thus saving you money.
– For some cards, you’re offered a reimbursement of price differences for eligible items. Especially if your purchase price drops within a certain time frame. This is called Price protection and is incredibly valuable if you make a lot of business purchases.
– Most credit cards extend business purchase warranties

  1. Easier Loan Qualifications

If you’ve applied for a loan (from a financial institution) and had no collateral… you understand the sheer migraines that ordeal is. Particularly in the event that you, whether personally or through your business, do not have a well-known/established credit score. In theory, this makes sense, as financial institutions are in the business of making money – and they do not do business with risky accounts.

On the other hand, credit cards do not require you to provide collateral. This means you easily qualify for funds and loans even if your credit history is less-than-stellar (or non-existent). A small business credit card is far more beneficial for you than applying for a loan from a bank without one.

  1. Separate Finances

Are you the owner of your business – or perhaps the senior managers? Maybe you feel inclined to use the corporate card for non-business expenses. No harm was done, right? Except for the accounting nightmare that occurs in having to separate personal charges from legitimate business expenses. The IRS won’t look favorably upon that. A business credit card makes recordkeeping for your taxes a lot easier, as well.

And your investors (if your business is publicly traded) will look even less favorably upon you. A separate credit card—for your business only—alleviates the headaches and drama caused by treating corporate accounts as your piggy bank. Plus, if you have a limited liability company (LLC) or S-corporation, you may lose certain legal protections.

  1. Insurance and Purchase Protection

An insured business credit card offers you “free purchase” protection. (For a small time.) What does this mean for you? It means you’ll be compensated for expenses if the purchased item is lost or stolen (within the aforementioned time frame). Any protection that guards you (and your business) against fraud and theft is protection well worth having.

Conclusion

As we just saw: a credit card for your business is a fantastic investment. However, it can only take you so far and offer you so many benefits. What you do with credit cards depends on your mentality – a concept Felix Dennis explains at-length in his phenomenal book How To Get Rich.


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Himanshu Agarwal

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Himanshu Agarwal is the Founder & CEO of a Digital Marketing firm SmartWeb. He is an online market analyst, startup strategist and a writer.
Himanshu Agarwal

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Himanshu Agarwal is the Founder & CEO of a Digital Marketing firm SmartWeb. He is an online market analyst, startup strategist and a writer.