If you run a small business, you may easily qualify for a credit card that is designed to meet your needs. However, it is important to ask yourself if you need one. Sometimes, business owners end up applying for a credit card when they do not really need one.
Benefits of a business credit card
The biggest benefit of a business credit card is that you can separate your business charges from your personal expenses. Hence, you can keep separate books for the same. When accounting for the business, you can tally up the business expenses with ease. Thereby, you can keep track of your personal and business charges. Individuals with multiple business entities can also manage their expenses easily. Certain credit cards come with features that are designed for business use only. They also allow the primary card holders to set and adjust their spending limits for the employee credit cards.
Suits every level of credit
A business credit card is ideal for every level of credit. It will allow you to earn rewards on your purchases and provide benefits like purchase protection and travel insurance. It will also allow the business owner to separate personal interest from business interest charges. A business credit card serves all the purpose that any other credit card may do.
You Might Also Like: All You Need To Know About Credit Card Fraud
Drawbacks of a business credit card
While there are perks, there are also drawbacks on having a business card. You will have to manage an additional credit card account, which could complicate your finances. Additionally, the business credit card may offer the same perks and benefits that a personal credit card is already offering. Business owners could end up incurring too much debt by making unnecessary purchases in an attempt to earn rewards.
Applying for a business credit card
Small business owners need to provide their Employer Identification Number in their application form. Sole proprietors or freelancers might not have this number. They can use their Social Security Number here. The only purpose of this number is to determine the personal credit history of the applicant. The credit score will play an important role in order to determine your creditworthiness. By providing your social security number, the lender will gain access to your credit report and learn about your creditworthiness. It is easy to apply for a business credit card but you need to make a well-informed decision after considering the advantages and drawbacks.
It makes no sense to apply for a business credit card if it does not add convenience in your business. You will only end up with another card to manage in addition to your personal credit card. Keep in mind that the business credit card is used for business purpose only and you need to keep the expense separate from your personal credit card. If you are a sole proprietor, freelancer or a small business owner, you will be eligible to apply for a business credit card.
Keep yourself updated with the latest on Credit Cards. Like us on Facebook and follow us on Twitter for more on Investments.
