What Is a Business Credit Card?

How a business credit card works

Business credit cards cater to everyone, from sole traders and freelancers to executives and employees in large corporations. In Australia, there are 2 main kinds of business cards available:

Business credit cards. These work similarly to regular credit cards: there are spending limits, and the monthly balance carries over every statement with minimum monthly repayments due and interest charged.
Business charge cards. Charge cards have no interest charges, but you must repay every statement balance in full.

Among both, you’ll find a variety of card types — from rewards to low-interest credit cards — and specialised features for business, such as accounting tools and software.

Business credit cards vs personal credit cards

A business credit card differs from a personal credit card in that it’s tied to your business or company and not your personal finances. As such, business credit cards are geared towards business operations and expense management.

Each business will have its own parameters, but the cards are generally only available for employees to use on business-related expenses. For example, when using taxis or restaurants for work instead of personal use.

Business credit cards often allow multiple users on the same account, but each with their own card. The liability for the card will then fall on whoever has taken out the card, usually the business owner, so the onus is on them to ensure that employees use the cards responsibly.

When applying for a business card for the first time, the application will reference your personal credit report. Your credit score can be affected if you are responsible for the business card. Therefore, as a new business owner, it pays to establish a business credit history as soon as possible. You should also open a bank account exclusively for your business. Taking those steps ensures clarity regarding your personal and business finances.

Corporate credit cards vs small business credit cards

Business credit cards are generally intended for a small to medium enterprise (SME) with up to 100 employees. So, the reward programs on these cards are geared towards those organisations.

On the other hand, corporate credit cards are aimed at the executives and employees of much larger companies, often with thousands more employees, with a correspondingly higher annual turnover. These cards usually offer users access to much very large credit limits but, once again, require correspondingly higher amounts of revenue.

What mainly sets these cards apart is that with a corporate credit card, the company is responsible for the liability on the card. In contrast, a business credit card may involve individual or joint liability among partners.

Like business credit cards, there’s no shortage of corporate credit cards on the market. Options range from relatively basic, lower-cost options to those offering uncapped rewards points earnings, comprehensive travel insurance cover and a range of other perks associated with high-end cards. Of course, those premium options have higher annual fees and interest rates to match.

Corporate credit cards also tend to offer more provider features, such as tracking employee spending, and other account management tools, such as setting limits on how much a cardholder can spend and on what.

Common business credit card features

A business credit card should come with features that assist in managing your day-to-day operations and cash flow. These specialised business features help make your business run more smoothly.

Common business credit card features to look for include:

Ability to add multiple users, so you can give your employees cards at no extra cost.
Business tools, so you can track spending and manage your cash flow. These can include online dashboards, expense reports and budgeting tools.
Security features, like fraud alerts, protection against credit card scams and unauthorised charges, and insurance cover.
Tax help, such as specific GST information for transactions or the ability to generate reports for tax purposes. (Learn how to pay tax as a sole trader.)
Easy-to-access data feeds, so you can import your transactions into accounting software. This helps track monthly expenses so you can manage your finances more easily.
Employee card management tools, so you can set limits for each employee, track spending, and block or lock cards if needed.
Customised card statements, so you can see your spending broken down by category or merchant.
Waived or limited fees, such as for additional cardholders and international transaction fees, to help save money.
Interest-free days, so you won’t be charged interest on your purchases if you pay them off within the interest-free period.
Rewards, such as cashback, miles and frequent flyer program points redeemable for travel and merchandise.
Generous sign-up bonuses, such as free travel or a cashback welcome offer.

» MORE: What businesses should know about credit card surcharges

How to get a business credit card

Much like getting your first credit card in Australia, there are specific steps you’ll want to take before you apply for a business credit card.

Check business credit card eligibility

Competition notwithstanding, banks are generally more cautious these days about loans in general, so their requirements for handing out a business card can be stringent but not overly complicated.

Apart from the ubiquitous credit card requirements of being an Australian citizen at least 18 years old, you’ll need a good credit rating. Each provider will also have its additional requirements, and those generally include:

A valid ABN (Australian Business Number)
A minimum annual turnover of $75,000
To have been in operation for 12 months to establish a pattern of cash flow
An Australian business address
To be registered for GST (Goods and Services Tax).

Obtaining a business credit card without these prerequisites can be problematic. Without the minimum revenue requirement, you should consider whether or not a business credit card is worth it. In the meantime, you may be better off with a business loan or a more basic personal credit card.

» MORE: Can you get a credit card with bad credit?

Assess your needs

Business cards can be an excellent tool for assisting with the financial operation of your business, but it’s vital to find one that suits your needs. Consider what you want from a business credit card and the type of features that will help you run your business. Once you have your needs in mind, start comparing providers and card options.

Compare business credit card providers

All the major personal credit card providers offer some form of business credit card, including international giants such as American Express and Citi, banks, credit unions, and Qantas, which has a range of business cards with banking partners.

These providers want customers to use the cards as frequently as possible, so they all offer rewards cards with fairly extensive programs. A good starting point would be your current financial institution, but shop around and see if your bank will match whatever you find elsewhere.

Apply for the card of your choice

After you’ve chosen a card and know your business meets the card provider criteria, the application process should be relatively straightforward. Most providers will give you a response very shortly after you’ve completed the online forms.

Once approved, your new business credit card will arrive in the mail. After you activate your new card, use it responsibly so it can help improve your business’s financial health.

Yes. Annual fees and interest charges are tax-deductible if you can prove that you use the card for business expenses.

» MORE: Working from home? Know your tax deductions.