5 Reasons Why Credit Cards Benefit Your Business
Everybody knows that entrepreneurial pursuits require a stone-cold dedication, an almost-psychotic obsession with breaking new ground, and properly planning multiple facets for the business. However, many people fail to take into account the stern importance of business credit cards. (That is, a credit card used solely for business purposes, as it has the name of your business.) Here are several reasons why a business credit card not only seems like a good idea, but will actually help secure your seat of success later on down the road.
photo/ Michael Jarmoluk via pixabay
- Impress Lenders
Every business in each and every single industry needs lenders and investors. Without business loans, new research or development couldn’t be possible. Sales and marketing departments (as well as their efforts) can be expanded. More employees can be hired. Without investors, you will have to fund your business yourself. Investors help generate capital, which can be used for customer acquisition, marketing efforts and all business expenses. A business credit card, essentially a record of your business growth, demonstrates to both investors and lenders that joining you will be a profitable venture for all parties involved, and proves to them that they aren’t throwing money down the toilet by financially supporting you and your business.
- Expands Your Overall Available Credit
Using personal credit cards for business purposes is an easily-preventable, but sadly common, mistake that many business owners make. Having one card to charge for both your personal and business expenses reduces the amount of available credit you have. This can be disastrous when emergencies in your business or your real life occur. Of course, how much available credit you have—and which rewards you get from using that credit—largely depends on the type of card, and with whom, that you have. That’s why Credit Card Reviews is a helpful practice of showing you which bank accounts and cards offer which rewards, rates and benefits. (Including how much cashback you get for using up your available credit.)
- Establishes Business Credit History
Establishing a credit history for your business—which is separate from your personal credit history—is important. This is because lenders and financial institutions often look at a business’s credit history to decide if they will approve or reject business loan applications. Without a credit history for your business, you will have a harder time receiving loans (depending on the type of financing you apply for).
- Employee Spending
The more employees you hire, the more important delegation (as a skill) becomes. Warren Buffett recommends hiring people smarter than you, to do the jobs themselves without coming to you for minor details and trivial matters. This may include business expenses – which business credit cards allow to you give to your workers, with limits set in place by you. This is important, especially for small business owners who are running their own business for the first time, to monitor expenses.
- Personal Liability
Do you own a corporation or an LLC? One of the primary reasons you may have chosen one or the other was for reaping the massive legal benefits. Maintaining your limitation of personal liability, then, becomes crucial. Your personal expenses and business expenses, when mixed, put your legal protection at risk, as well as reducing your opportunities for receiving tax deductibles.
Conclusion
A good business credit card is not a difficult decision. However, deciding what to do with this card, in the name of company growth, will take some time planning. By keeping your personal and business expenses separate, this planning will be easier to execute.
Author: Himanshu Agarwal
