Business credit cards are a great way to cover your expenses and separate business purchases from personal purchases. This separation is especially beneficial when tax season rolls around.
But when it comes to finding the best credit card for a small business, the options can be overwhelming. How do you know what credit card will be right for your business and its unique needs? Here’s what our experts at Founder’s CPA recommend.
How small businesses use credit cards
If you’ve never utilized a business credit card, there are a few things to keep in mind. First, the spending limits could be higher than personal credit cards which means you’ll have more purchasing power. Any benefits, features and rewards are tailored to how your business spends.
Because business credit cards aren’t covered by the CARD Act, they don’t have as many fee restrictions as personal credit cards. This means it’s essential to always pay on time. Plus, the majority of business credit cards require a personal guarantee, meaning you, not the business, is on the hook for any debt incurred.
Now, let’s explore the steps to find the best credit card for a small business.
Steps on finding the right credit card
Decide if a business card is right for you
First and foremost, consider if the benefits of a business card are worth it for you. One of the main advantages is the ability to separate company expenses from personal expenses, but keep in mind that you can do this using a consumer credit card as well. For example, if your business is in the middle of a growth stage and there will be a lot of purchases happening each month, a business card can offer higher credit limits.
Consider the types of business credit cards you might want
Just as there are various types of personal credit cards, there are different types of business credit cards that are broken up into different categories. Examples of categories include cash-back rewards credit cards, travel rewards credit cards, gas and fuel credit cards, and starter credit cards. Consider your unique business needs when you’re deciding which card is best for you.
Determine if paying an annual fee is feasible
It’s possible to find business credit cards that don’t charge an annual fee, but these might not offer the same perks as others do. Generally speaking, the better the rewards program, benefits, and features, the higher the fee is. For example, travel credit cards could have fees upwards of $695 and they come with perks like Global Entry application fees, qualifying airline fees with your selected airline, CLEAR airport security membership fees, etc. Other credit cards may be simpler and come with a $0 introductory annual fee the first year followed by a $95 annual fee after. However, this card likely won’t come with the same level of benefits.
Look at the fringe benefits
You may be at the point that you’re considering only a couple of different cards. If this is the case, think about the additional perks that could make your decision for you. Maybe you spend a lot of time traveling and one card offers lounge access. Or maybe you want a card that will integrate with your accounting software.
Founder’s CPA is here to help
Our team at Founder’s CPA is here to help make your life as a business owner as easy as possible. If you have any questions about the best credit card for small businesses or you’re interested in learning more about how we can help, take advantage of our free consultations to get started.
