When you were growing up, your idea of a business was probably the company your parents worked at, or perhaps your favorite neighborhood store. But these days, it seems like nearly anyone can own a business, even if it’s just a side hustle or two.
Our connected economy makes it easy for everyone to start a new business, but when it comes to accounting and filing taxes, we still have to play by all the old rules that date back decades. Thankfully, the right credit cards can make it easier to manage your business expenses.
How small business credit cards work
Most major credit card issuers offer credit cards designed for small business owners. To qualify, you only need to operate a business of any size.
For example, you could be re-selling things online, running a dog-walking service, or offering your expertise as a freelance consultant. You don’t even need to incorporate. You can be a sole proprietor, have a partnership or operate a Limited Liability Corporation (LLC).
To apply for a small business credit card, you must supply your personal income just like you would with your personal credit card. That’s because a small business credit card requires your personal guarantee of repayment, just like your other credit cards.
The advantages of using a small business credit card
When you add a small business credit card to your wallet, you instantly have a way of separating your personal transactions from your business expenses. But let’s see what else they can offer.
Rewards for your business
A small business card can offer you rewards that may be more suited to your business purchases than your personal ones.
For business owners who travel frequently, a great option is the Ink Business Preferred® Credit Card – an ideal way to maximize your travel benefits and rewards. You can earn 100,000 bonus points after you spend $15,000 on purchases in the first 3 months after account opening. That's $1,000 cash back or $1,250 toward travel rewards when you redeem through Chase Ultimate Rewards®. Plus on the points front, you earn 3x points per $1 on the first $150,000 you spent in combined purchases on travel, shipping purchases, internet, cable & phone services. Finally, you can earn 1x point per $1 on all other purchases, and your points never expire.
Another advantage of having a small business card can be the greater tracking and reporting features. It’s easier to see what transactions are solely business-related, since you’ll use your card just for business purchases.
Financing your business
Finally, a small business credit card can offer you a means of financing your business. First, adding a small business credit card gives you increased purchasing power beyond your personal credit cards.
In addition, a small business credit card can offer new accounts the interest-free financing you may need to get your business off the ground.
For example, the Ink Business Cash® Credit Card offers a 0% Intro APR on Purchases for 12 months then a regular purchase APR of 17.49% - 23.49% Variable. If you have a couple of significant expenses on the horizon, this introductory rate can give you a little breathing room to pay them back over time without accruing any interest.
Promotional APRs are often accompanied by welcome bonus offers, and the Ink Business Cash® Credit Card offers one of the best – $900 bonus cash back after you spend $6,000 on purchases in the first 3 months after account opening. This means that you can actually save money on big expenses if you take advantage of all the benefits the card offers.
Once the interest-free promotional financing offer expires, you can still use your small business credit card to finance purchases, but it’s never a good idea to carry a balance over the long term. Remember, you will personally be responsible for repayment, even if you decide to close down your business.
Do you have to use a small business credit card to separate your expenses?
There’s nothing that says you must have a small business card to keep track of your expenses—it’s just a useful tool for doing so.
You can certainly charge business expenses to your personal card, or personal expenses to your business card, but then you’ll be creating more work for yourself (or your accountant) when it comes time to do your taxes.
However, there are times when it will make sense for some people to mix expenses around in order to earn the additional rewards offered. For example, some families might use their small business credit card to earn extra rewards when they purchase back to school supplies at an office supply store. So long as you remember to separate those expenses from your business ledger, there’s nothing wrong with doing so.
All small business owners need to find the tools that will best enable them to make profits and grow their company. A small business credit card is just another way to help you manage your business, and perhaps earn some rewards on the side.