Why Every Business Owner Needs a Business Credit Card

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No matter the type and size of your business, you should have a business credit card.

When you're a business owner, it's normal to focus on running and growing your business. But the way you pay for business expenses is equally important, and this is an area where business credit cards can be a huge help.

Whether you have a company with several employees, a sole proprietorship, or a side hustle, your business's payment method matters. There could be serious ramifications for you and your business if you choose the wrong one. The good news is that if you have any sort of business, you're likely eligible for a business credit card, and there are several great benefits to opening one.

Keep personal and business expenses separate

Keeping personal expenses separate from business ones always makes sense. For starters, it will make accounting and tax preparation much easier. The last thing you want is to spend hours sifting through credit card statements to figure out which charges were personal and which were for your business.

A business credit card simplifies this because you can use it for all your business expenses. To see how much your business spent during any specific time period, you can simply review your online account. And when tax time rolls around, you can find your deductions in this same account.

Have a higher credit line just for your business

Opening a business credit card will give you a new credit line solely for your business. You won't need to worry you don't have enough available credit for business expenses if you've already used your card to pay your own bills.

You may also get a higher credit limit from a business credit card than you'd get from a personal credit card. Credit card companies realize business owners generally spend more than consumers and need more credit to cover their expenses. For that reason, business credit cards tend to have higher credit limits.

Take advantage of business credit card benefits

Business credit cards are usually a better fit than personal credit cards because they have features intended to meet the needs of business owners.

Here are a few examples of some of the benefits the best business credit cards offer that can be valuable for business owners:

  • Employee credit cards. These are free with many business cards and may also include an option to set individual spending limits
  • Bonus rewards in categories where business owners have higher spending, such as advertising, office supply stores, and shipping
  • More detailed transaction information and quarterly reports
  • Integration with bookkeeping software
  • A 0% intro APR to finance expensive business purchases

Protect your credit score

Another advantage of having a separate credit line for your business is that card issuers usually don't report business credit card activity to the consumer credit bureaus. That can help you avoid your business spending damaging your personal credit score, especially for large purchases.

Here's an example: The amount of your total credit you use is called your credit utilization ratio, which is one of the most significant factors in calculating your credit score. If you have a business credit card and the card issuer doesn't report its activity to the consumer credit bureaus, then you can charge business expenses to it without raising your own credit utilization.

Keep in mind that some card issuers do report business card activity to consumer credit bureaus. It is uncommon, but if your card issuer is one that does, then your business card could affect your credit score.

Benefits for every business owner

A business credit card can help you manage your business's cash flow, earn rewards on all your business purchases, protect your personal credit, and much more. Those perks make it a smart, responsible decision to apply for a business credit card.

Own a restaurant? If so, check out The Ascent's guide to best business credit cards for restaurant owners.

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