Many new small business owners do not have a credit card account specific to their business. They might use a personal credit card to make business related purchases every now and then, but the majority of new business owners overlook the value a business credit card may provide to their business.
There are many reasons why a small business owner would benefit from having a credit card account specifically reserved for their business use. First, though, let's discuss the typical reasons why a small business owner would avoid a credit card!
Top 6 Reasons Small Businesses DON'T Have Credit Cards
1) Business owner is afraid that they will overspend if they have access to a credit card.
2) Business owner thinks it's complicated to apply for and receive a credit card under the business name, or feel they don't have strong enough credit to get one.
3) Business owner thinks finance charges and interest rates will be expensive and cost more money than the convenience of having a credit card is worth.
4) Small businesses don't make enough purchases to require a credit card.
5) Business owner likes the control over spending by employees when a check or cash has to be issued for purchases.
6) Business owner applied for one and was denied.
Is the reason your small business does not have a credit card found on this list? If so, you might be surprised how the benefits of having a credit card for your business can help propel your business forward.
Credit Card Benefits for the Small Business Owner
While many of the reasons small business owners decide not to get a credit card for their businesses are valid, there are many advantages to the businesses that do decide to get a credit card.
When you make all of your business purchases and pay for each expense related to the company on a single credit card, you have an easier time with your bookkeeping. You can simply refer to your credit card statement each month, or on a quarterly or annual basis in order to see your purchases and expenses at a glance. You can cut one check each month to pay for all of the purchases, making it much easier to manage your business checking account, also.
Having a company credit card allows you to get additional cards in key employee names. If your office manager handles the office supply purchases, you can give her a card to make those purchases with, for example. There is less time required of you to approve or deny his or her orders and no need to cut a check when the manager is ready to place the order. Simply give the employees with cards a spending allowance and you can quickly monitor the spending of each employee by glancing at the card statements.
If you select a credit card for your business that offers a rewards program, you will benefit further by achieving the rewards under that benefit. As a business owner, you would decide if you have reason to purchase airline tickets, or if you would benefit better from a card with cash back or special merchandise purchases with the points you've earned.
Having a business credit card opens the door to many opportunities for your business that you wouldn't have if you avoided having a card. Be sure to take these benefits and advantages in consideration when deciding whether or not to apply for a business credit card. If you fear your business credit isn't strong enough for a card at this time, you can opt for a prepaid card or a secured credit card to build your company credit history. You'll still receive all of the benefits and conveniences of a credit card, you'll just need to take the extra step of funding a prepaid card before you can use it.