No matter the size of your company, a good cash flow is always necessary. Furthermore, you may sometimes wind up needing to make some larger purchases that cannot exactly wait. To maintain a good cash flow and to be able to fund all kinds of purchases you may need, you could rely on using credit cards for your business. There is absolutely no doubt you have heard of these particular financial instruments already, and there is also no doubt that you have started thinking about getting one of these for yourself.
Yet, you don't want to make any final decisions before actually understanding what the benefits of doing so would be. After all, this is a financial decision you are making here, and making financial decisions for your business is delicate work. In other words, it has to be done carefully, and rushing into things is certainly never a good idea. You most likely understand that already, which is why you are here right now, instead of in the process of applying for one of these cards.
So, in short, before applying for one of these cards, you want to learn two crucial things. For starters, you want to figure out why getting one of these is a good idea for your business. And then, you want to understand how to successfully go through the process of choosing it. Those are the two main questions that we will answer for you below, so you will learn what you need to know if you simply keep on reading.
What Is a Business Credit Card?
Before we get to answering those two questions, though, we need to make sure that you understand specifically what a business credit card is in the first place. Sure, understanding this is certainly not difficult, since credit cards have been around for a while and pretty much everyone nowadays understands how they work. Even so, let me make things perfectly clear here.
Basically, business credit cards work in the same way as the personal ones, with the only difference being in the fact that these are attached to your company's name, instead of your own. They provider companies with a line of credit, and allow them to make any kinds of purchases they need and want. There is, naturally, a limit on the line of credit, and it will depend on your preferences as much as on the provider you choose to issue you the card. These financial tools have been designed to support small businesses and entrepreneurs, as well as larger businesses that have been operating on the market for a while already. In short, they are suitable for any kinds of companies.
Auto DraftWhy Get One?
You are now clear on how these financial tools work, aren't you? The next thing you want to learn, thus, is whether these are right for you and whether you should get them. If you visit kredittkortinfo.no/bedrift/, you will get a clearer idea about why these actually pay off and why they are worth getting. In addition to that, below I will share some reasons why you should consider getting these cards, which will further help you make your final decision on whether you want to do it or not.
- Keep the Expenses Separate
Let us begin with the most logical reason here. In few words, keeping your personal and your business expenses is rather beneficial. This is important not only because it will help you manage your finances better and possibly save some money in the long run, but also because it will lead to more easily categorizing expenses when trying to claim eligible deductions on your taxes. Furthermore, when your books are so well organized, it will be easier for you to apply for business loans and grants.
- Manage Employee Spending
As a business owner, you will sometimes have to delegate spending to your employees. Managing that will be quite simple when you have a business credit card. For one thing, you will be allowed a number of employee cards at no additional charge, and that number is often unlimited, depending on the provider, which will make things quite easy for everyone. Plus, you will have control over where and when individual employees can use the cards, which will also give you a clearer overview of the overall spending.
Auto Draft- Gain Purchasing Power and Flexibility
It may often be necessary for you to buy certain supplies or pay money to some vendors before the money from your previous job comes in. Put differently, there are certain expenses that won't be able to wait for the accounts payable. In such cases, you will benefit quite a lot from having a business credit card, because it will offer you the flexibility of paying whenever and whatever you need to pay. Apart from that, since these have a higher limit than personal ones, you will gain quite a lot of purchasing power with them and you will thus be able to cover all kinds of expenses that will come your way.
- Earn Rewards
Here is a benefit that you may have already been aware of, but let me mention it anyway. Basically, with a business credit card, you can look forward to quite some rewards. For starters, there is the cashback reward that you can earn when spending money through your card, and then there are also travel points, which may come quite in handy as well. Naturally, various providers will offer different types of rewards, so it is up to you to decide which ones you would prefer. But, we will get to that a bit later
- Build Business Credit
Perhaps the biggest benefit of using business credit cards lies in being able to build business credit. Why is this so important, though? Well, a good credit score can impact quite a lot of other financial aspects of running a business, such as the eligibility for getting loans, and the interest rates you can get on those loans, as well as insurance rates and similar things. The better your score, the more favorable your terms will be on insurance and on those loans. And, a great business credit card, when used reasonably and responsibly, can help you build that score, which is further discussed on this page.
How to Choose It?
The above should have made at least some of the benefits of business credit cards completely clear to you. So, now that you understand why getting these financial tools is a good idea, you want to understand how to choose the best one for you. The worst thing you can do is decide on the spur of the moment and just make a random choice. While you could wind up accidentally making a good choice, this is not exactly something you want to leave up to chance. Quite on the contrary, you will have to take your time to carefully go through the choosing process and I will help you out with that by offering some tips below.
- Examine Your Expenses
You should begin the process by examining your specific business expenses. Taking a look at your books for the previous period will allow you to identify a few of your biggest expenditures, which will give you a better idea about the type of a card you should be looking for. Examining the expenses is especially important for the part of choosing the reward programs offered, but we will cover that tip below separately. In short, though, this is where you should start your searching process.
Auto Draft- Research Various Options
Once you have examined your expenses and once you have figured out what your biggest costs are, you should proceed towards researching the different options that exist on the market nowadays. There are, without a doubt, numerous providers offering various credit card solutions, and it is your task to check all of those out in more details, with the goal of figuring out which option could be best for you. Start by finding the providers and their card solutions online, but remember to get some recommendations from other business owners as well. Then, research all of the providers in details, aiming at choosing a reputable one to work with, and aiming at selecting the best card for you in the end.
- Think About the Reward Programs You Could Benefit From
Let us now circle back to the thing I've mentioned above, when talking of examining your expenses, as it is definitely quite important. In the simplest words possible, you will have to check out the different rewards programs offered by specific providers and their credit card solutions. And then, you will have to carefully figure out which programs you could mostly benefit from.
Remember those biggest expense categories that you have identified during the process of examining your books? Those are the ones to focus on. In short, you should look for credit cards that allow you to earn rewards when spending money on those specific categories, as that is how you will maximize those rewards and really get the most out of your business credit card. So, carefully consider all of this before choosing.
- Examine the Fees
Unsurprisingly, you will need to consider and examine the actual fees associated with the specific business credit cards you are considering. Think about how much you would be ready to pay on those fees on an annual basis, and then look for the cards that fit in with that range. Remember to first check the normal and the fair range, so that you can know when you come across some options that may be too expensive. And, of course, keep in mind that you should also think about what you are getting from the credit card so as to decide if the fees are reasonable.
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