Are You Launching or Already Have a Business? Credit cards can make a substantial impactful on the financial health of both new and established businesses alike. Regular use and prompt payments on a business credit card will allow it to build its credit rating, increasing chances of long-term loan approval in the future.
1. Interest-free periods
Business credit cards provide long interest-free periods, enabling you to spread out large purchases over time without incurring interest payments. This feature can be particularly beneficial when purchasing office equipment or other large assets.
Many business credit cards offer grace periods to help keep cash flowing when times get tight, saving hundreds or even thousands in interest each year.
2. Rewards
Business credit cards provide numerous rewards, from cash back and points to travel and loyalty benefits, that can prove particularly helpful for small businesses that spend big on office supplies, phone bills and gas stations.
Some cards also provide bonus rewards in specific spending categories; if your business spends heavily on client dinners, a card with an accompanying dining bonus might be ideal.
Many credit cards provide an introductory 0% APR period of nine or more months; some issuers even extend these offers up to 15 months.
3. Additional cards
Like consumer credit cards, business credit cards offer attractive perks and bonuses that make their use worthwhile, such as rewards programs and higher than average credit limits. You could even benefit from additional perks such as accessing free tools that could help make your business more efficient or a lower interest rate on debt repayments depending on which card is chosen.
A business credit card can help you navigate the often complex world of small business lending and avoid potential pitfalls that often plague new entrepreneurs. A credit card for business use can be beneficial for any size organization – from startups and smaller operations, such as SME’s, to freelancers needing startup capital.
4. Flexibility
Small businesses don’t always have access to the same financial buffers that larger firms can, but flexible business credit cards offer them additional purchasing power and provide a financial buffer in times of tight cashflow and unexpected expenses arising during slower revenue cycles.
Many business credit cards offer zero interest-free periods on purchases, making it possible to carry a balance without incurring substantial interest costs. This feature can be especially helpful when making new investments or starting up your company from scratch. Furthermore, many cards allow employees to make purchases directly for your company without being reimbursed from your account.
5. Taxes
Maintaining separate business and personal expenses is an integral component of being a business owner, making tax time much simpler by enabling you to easily deduct fees and interest on your tax return.
Credit card fees and charges may be deductible on your business taxes if they can be directly tied to business expenses, though this process requires careful accounting and must be managed correctly.
Reward earned with a business credit card such as cash back or rebates aren’t taxed; however, bank account bonuses that you earn by opening new accounts could potentially be taxed.
