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A business credit card isn’t just a piece of plastic (or metal). It’s a business tool that, used strategically, can offer entrepreneurs a number of advantages — especially if you’re deciding between a business credit card and a personal card.
Many of the best business credit cards include perks, discounts and rewards. But those are just some of the top benefits of a business credit card. Here are the others.
1. Build your business credit score
A good business credit score can impact other aspects of your business's finances, including insurance rates, business loan terms and trade lines. Opening a business credit card and maintaining a good payment history is one of the easiest ways to establish and build your business credit score.
As an added bonus, many business credit cards don’t report information to the consumer credit bureaus that handle personal credit scores (unless you don’t pay your business card). This can help protect your personal credit, which can take a hit if you’re maintaining a high credit card balance to cover business expenses.
2. Earn rewards for business spending
Your business is probably already spending on things like office supplies, business travel, advertising and software. Why not earn cash back or travel points for those purchases?
The Ink Business Cash® Credit Card, for example, earns 5% cash back on up to $25,000 a year in spending at office supply stores and on cable, internet and phone service. That’s up to $1,250 in cash back on money your business is already spending. And the Ink Business Preferred® Credit Card gives you up to 3x points on shipping costs.
Other cards offer up to 3% back on gas or anywhere from 2x to 5x rewards for Facebook and Google advertising. And you earn rewards on employee cards as well as your main business card.
Selecting a business credit card that matches your business spending can help your business bring in passive income to put toward your business goals.
3. Gain purchasing power and flexibility
Business expenses don’t wait for accounts payable. Sometimes, you need to buy supplies or pay a vendor before money from your last job comes in. Business credit cards give you the flexibility to do so and typically have higher credit limits than personal credit cards.
You can also use a 0% APR business credit card to finance startup costs or large purchases. Or use a balance transfer business credit card to refinance high-interest debt. The U.S. Bank Business Triple Cash Rewards World Elite Mastercard®, for example, offers 0% intro APR for 15 billing cycles on purchases and balance transfers, and then the ongoing APR of 19.24%-28.24% Variable APR.
4. Keep business and personal finances separate
Having a dedicated business credit card — or cards — used solely for business expenses can save time, money and headaches when you need to categorize expenses and claim eligible deductions on your taxes. Keeping tidy books also makes it easier to generate financial reports and apply for grants and business loans.
The interest and fees on a business credit card can be tax-deductible expenses if you use your card exclusively for business purposes.
Drawing a clear line between business and personal finances is especially important for LLCs and other entities that have limited liability protections. Mixing business and personal expenses can also jeopardize the legal protections that safeguard your personal finances against business lawsuits.
5. Manage employee spending with controls, reporting
Business owners often need to delegate spending power to employees. Business credit cards can let you do so with confidence. Most issuers allow an unlimited number of employee cards at no additional charge, with some offering virtual cards that can be issued instantly and turned off just as fast.
» MORE: Best employee credit cards
Most business credit cards also let you set spending controls to dictate when, where and how individual employee cards can be used. Depending on the card, you can set an overall and per-purchase limit, restrict purchases to select categories or even set guardrails on the time of day an employee card can be used.
You can also get real-time alerts on employee card use, allowing you to act fast if you spot an unauthorized purchase.