Credit Cards for Small Business

/ BY / Small Businesses

If you have a small business or are considering starting one, one of the first things to consider is how your business will pay for certain expenses. Credit cards designed specifically for small businesses are an excellent way to separate your personal expenses from those of your business while offering the necessary cash flow to keep your business afloat.

Benefits of credit cards for small businesses

Some small business owners simply use their own personal credit cards to pay for their business expenses, or they don't like the idea of opening up credit for their business. However, the Federal Reserve reports that 83% of small businesses use small business cards, and many financial and small business experts consider small business cards an essential operating tool. A few advantages of these types of credit cards include:

  • Provides needed start-up capital. The inability to fund a small business or pay operating expenses in the beginning is one of the main reasons small businesses fail in their early days. A business credit card can help cover costs before your business starts generating a steady income.
  • Separates personal and business finances. When you use your personal credit cards for business expenses, you put your own credit at risk by adding your business debt to it. Small business credit card debt and payment history does not appear on personal credit reports. Additionally, if you have an LLC, you are legally required to keep business and personal transactions separate.
  • Provides specialized perks and rewards. Most consumer credit cards offer rewards related to day-to-day living expenses, like cash back, grocery discounts, and so forth. Small business credit cards also offer rewards, but these are tailored specifically for small businesses, such as office supplies, shipping, and travel expenses.
  • Simplifies bookkeeping. Using a small business credit card can make your accounting much easier, particularly with regard to taxes, because you don't have to go through the labor-intensive process of separating personal and business expenses. Detailed credit card statements simplify this process for you or your accountant.
  • Establish credit in your business's name. It's just as important for a small business to establish a credit history as it is for an individual. This allows you to rely less on your personal credit and provides more opportunities for funding down the road should your business expand or need more capital.

Choosing a small business credit card

Selecting a credit card for a small business is not that different from selecting a consumer credit card. A few things to look for include:

  • Interest rates. Only 18% of all small businesses carry a balance on their credit cards, according to the Federal Reserve. Most small businesses use credit cards for rewards or to establish credit. If you do intend to carry a balance, find a card with a 0% introductory rate and pay it off as quickly as possible to avoid hefty interest payments.
  • Fees. Business credit cards often carry more fees than consumer credit cards. If you are unaware of these fees, they can quickly add up and end up costing your business a great deal of money. You can avoid this by thoroughly researching cards and reading the small print before selecting a card.
  • Rewards and perks. Many small businesses use credit cards simply for the rewards they provide, such as airline travel, electronics, cash back, or discounts on shipping and office supplies. Look for a card that provides relevant perks for your small business.

Business credit cards are a must for small businesses that want to establish a business credit history, separate personal and business finances, and earn special rewards. With the right research, you can find a card that’s perfect for your small business.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.