Business credit cards have been providing both owners of small time operations and much larger operations with the capital needed to fund their business and manage business transactions. The amount of business credit card solutions are endless but when it all comes down to the nitty gritty of the card they do have a number of things in common. Here is a list of seven things you should know about business credit cards so you can choose the right one for your business.
1. Your personal and business credit history will determine if you are eligible. Credit card issuers will take both your personal credit and your business credit into consideration when determining if you should be approved for the card and also to determine what your terms such as, interest rates and payments should be. Your business credit will be the major deciding factor but when there is little or no business history credit card providers will lean heavily on your personal credit to make a decision. This is why it is important to ensure that your personal credit is up to scratch and free from errors before you apply for business credit.
2. You might be asked to take personal liability for the business credit card. If your credit card provider states joint and several liability in their terms and conditions you along with the business will be held liable for the business card debt. If on the other hand the provider offers commercial liability your business will be held solely reliable for the debt. You must be fully aware of your responsibilities when you sign up for the card.
3. Credit limits are higher on business credit cards. Since businesses require a larger spending allowance than consumers, business credit cards usually have credit limits that are much higher than consumer credit cards. Credit limits can start at $10,000 and go upwards of $75,000 depending on the business. In fact some cards do not have a stipulated credit limit giving the responsible business owner all the capital needed to fund the business. These higher credit limits come at a price though since a lot of business credit card have high annual fees.
4. Extra cards can be issued to employees in the business. Extra cards can be ordered at no cost under the same account so that employees can use the card for business related expenses. The business owner can specify how much access the employee gets along with a predetermined spending limit. The statement will include all the transactions for all the cards.
5. The business owner can dictate the payment terms. In some cases the business owner can have some say in the payment terms of the card. He can do so based on the cash flow of the business so that payments will be on time. Card issuers will also offer incentives such as rebates on early payments or the option to defer a payment without interest. Payment terms also vary by the type of card. Business charge cards require full payment of the balance within 30 days while business credit cards require only the minimum payment. Extended payment options allow for the purchase of large equipment at varying interest rates.
6. Business cards simplify accounting. Business credit cards are a great way to separate business and personal expenses. This is necessary to avoid tax issues and simplify the process of filing taxes. They also help to keep track of and monitor business expenses if the majority of business purchases are placed on the card. This removes the need to search for receipts if they are lost and the online reporting makes it easy to import purchases right into the accounting software that the company uses.
7. Rewards add the right amount of extra incentive. From travel rewards to cash back rewards and discounts on purchases business card rewards when used to save money in the business makes all the spending worth the while. It is the perfect way to get something extra back for all the money that you spend.