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5 Reasons Why You Need Business Credit

June 24, 2021

For any business owner, acquiring funds is just as important as taking good care of one's employees or providing quality customer service.

The best way to leverage funding is to use business credit cards for company operations.

Many people have tapped into 0% interest business credit cards as the foundation for their business transactions.

If you are a business owner who still uses your personal credit card to charge business expenses, then it is time to switch over.

Having a business credit card comes with all different advantages that will contribute to the success of day-to-day business operations. Here are the top five reasons why you need business credit.

1.Protect Your Personal Credit Score  

If you’re constantly putting business expenses onto a personal card- you can ruin your utilization rate by getting too close to your credit card limit.   

This is especially relevant if you charge a lot and accumulate debt before receiving returns to pay it off.   

Establishing your business entity and utilizing business credit will allow you to protect your personal credit, by limiting your personal liability for your business debt.  

When using a business credit card, your expenses are connected to your business EIN instead of your social security number, removing any personal liability for debt acquired on the business credit card.   

Instead of worrying about whether a creditor can come after your personal assets if your business stalls or if you have trouble paying back debts, your debt on business cards will protect your personal credit score.  

2.Access More Spending Power 

Businesses have higher and more frequent expenses than the average consumer using their personal credit cards.  

When a business owner uses business credit cards they have access to a much higher credit line, and therefore can charge more expenses on that card.   

Whether you are financing a real estate deal or purchasing inventory for your eCommerce business- the industry doesn’t matter- making necessary purchases using business credit gives you access to more purchasing power.  

3.Easily Track Business Expenses 

Not only will you have divided purchase histories between your personal and business cards, but when you make charges with business credit, you are tracking all credit expenses.   

Instead of only having one credit card that needs to be borrowed and tracked when an employee needs to use it, most business credit cards give account owners access to issue employees individual credit cards that are linked directly to your business account.   

The cards will allow you to track employee use of the card with individual statements, including pre-approved spending, setting spending limits, checking receipts, and transaction reviews.   

Business credit cards allow expenses to be authorized, rather than approving every purchase made by employees one at a time, especially if the purchase is urgent.  

There are also transaction controls for merchants, vendors, specific purchase locations, and verification processes to ensure your employees are staying within your company's spending guidelines.    

4.Earn Better Credit Card Rewards  

Personal credit can come with a few perks, but when you use business credit cards the rewards received are of higher value and due to consistent use of your business credit cards, reward points build up very quickly.   

Many of our clients pay for plane tickets and reap countless numbers of rewards such as signing bonuses, travel rewards, hotel stays, access to private airport lounges, free Wi-Fi, and cashback or cash-match depending on the type of business card you hold.   

Placing business expenses on a cash-back business credit card and paying in full at the end of the month when business revenue comes in, is the best way to rack up points, with any business card that earns rewards.

Leverage ongoing expenses with business credit cards to rack up points. Whether it is cash-back, rewards points or frequent flyer miles, you will be able to benefit just by swiping your card.

5.Protect Your Equity and Keep Profits

Using a 0% interest business credit card is the best way to finance your business, especially for startups, real estate deals, or eCommerce businesses.   

By financing your company through business credit instead of hard money lenders such as a loan, you will be able to keep your profits rather than paying back a percentage on a loan.   

Many forms of operating capital involve sharing ownership in the business such as venture capital options or angel investors. You don’t lose ownership or give up parts of your company when using business credit cards because the debt accrued is your own.  

Using business credit to finance your company will allow you to keep all of your equity and protect your profit margins because you control the amount of debt incurred on your business credit cards.   

Conclusion  

Using personal credit cards can become troublesome and it's important to separate business expenses from your personal accounts.  

Instead use business credit cards to protect your credit score, have more purchasing power, have access to great credit card rewards, and protect your business equity.   

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