I talk to a lot of entrepreneurs. Many of you want to or are looking into business credit for expanding (or investing in) your operations.
It’s a good idea. What follows are 11 reasons why you should get business credit – and two cards I recommend.
Personally, I pay for EVERYTHING in my business with business credit, and nothing with cash (i.e., actual money or bank debit cards). I use banks only to pay credit card bills.
1) Make purchases: Business credit cards allow you to make purchases for your business needs, such as advertising, office supplies, equipment, and inventory.
2) Track expenses: Business credit cards provide a convenient way to track and categorize business expenses, simplifying accounting and bookkeeping processes.
3) Build credit history: Proper and responsible use of a business credit card (read: paying the bills on time!) can help establish and build a strong credit history for your business, which can be beneficial for future financing needs. (NOTE: Your business credit history is separate from your personal credit history.)
4) Earn rewards: Many business credit cards offer rewards programs that allow cardholders to earn points, cash back, or other incentives based on their spending. These rewards can be used for business-related expenses or personal benefits.
When you hear someone say they “use points” to pay for stuff, this is what they're talking about. I've paid for first class flights, hotels and meals with points accrued from using business credit cards.
5) Access working capital: The #1 reason businesses fail is a lack of cash. Working capital is cash that you can access based on expected future performance. Business credit cards can provide a revolving line of credit, allowing you to access funds for day-to-day operational expenses or unexpected cash flow needs.
6) Manage cash flow: Credit cards can help manage cash flow by providing a buffer for expenses while waiting for payments from clients or customers.
7) Separate personal and business expenses: Using a business credit card helps keep personal and business expenses separate, making it easier to track business-related spending and simplifying tax reporting.
8) Streamline employee spending: Business credit cards can be issued to employees with preset spending limits, making it easier to manage and track their expenses while giving them the ability to make necessary purchases on behalf of the business.
For example, if you have staff you can issue each of them a company credit card with a limit on how much they can spend, and see every single charge they make on that company card.
9) Gain purchase protection: Many business credit cards offer purchase protection, including extended warranties, price protection, and fraud protection, providing added peace of mind when making business-related purchases.
I don't know if you've ever tried to get a charge reversed with a bank card, but it’s damn near impossible. With business credit cards, it’s much smoother and easier.
10) Access travel benefits: Some business credit cards offer travel-related perks such as airport lounge access, travel insurance, and discounts on flights and hotels, which can be valuable for business travelers.
If you've never hung out in an airport lounge while waiting on a flight, you need to have this experience. The food is free.
11) Manage recurring expenses: Set up automatic payments for recurring expenses like utilities, subscriptions, and software licenses using your business credit card, making it convenient and ensuring timely payments.
With the reasons to use business credit established, here are two cards I personally used & recommend (affiliate links).
NOTE: You do NOT need to have an EIN nor an LLC to apply for these cards. When asked for your business name (this will be on the card itself), call it whatever you will be naming your future business (it can be as simple as “Your Name Inc”).
1) American Express Blue Business Plus: https://americanexpress.com/en-us/referral/DREBAec6?xl=cp01
This is my favorite business credit card. AMEX offers rewards in the form of points, which works like cash as they accumulate and can be used for future purchases. Not to mention AMEX Travel, which offers special prices on flights, and the always-updating “Offers” which are special deals you get with different businesses when using your AMEX card.
2) American Express Business Gold ($295 annual fee): https://americanexpress.com/en-us/referral/DREBLzsR?XL=MIMCP
All the same perks as the Blue Business card above plus more.
Most notably, more points on purchases, no set limit on the card, and more purchase protections.
Note that the Gold Card is a “charge card”, not revolving credit. This means that with the Gold Card, you pay the entire balance every month and don't carry it over like you would with the Blue Card.
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