About 68% of small businesses use credit cards to finance parts of the business. Some use credit cards for startup expenses, while others invest in courses to improve their skills.
If you’re thinking of using credit cards for expenses, you should consider corporate credit cards. There are benefits to using credit cards for your business.
Read on to learn what corporate credit cards are and why you should use them in your business, then get to know too if is it illegal to use a business credit card for personal spending.
- What Are Corporate Credit Cards?
Corporate credit cards are simply credit cards for large small businesses that have several employees and earn about a million in revenue each year.
There are some differences between corporate credit cards and small business credit cards. Small business cards are available for businesses of any size, including sole proprietors.
The small business owner is personally responsible for the debt, even if it’s an LLC. With corporate credit cards, the corporation is responsible for the debt.
If the corporation fails, the business owner isn’t responsible for the payments. That’s not the case with small business credit cards. Corporations have to go through a strict application process and financial audit to get approved for an account.
Another issue between corporate credit cards and small business credit cards is authorized users. If an employee of a small business is authorized to use a company credit card, this can appear on their personal credit report. That impacts their credit score and their ability to get a loan.
Corporate cards have no impact on the personal credit of employees.
- Reasons to Use Business Credit Cards
The best reason to use a corporate credit card is to build up business credit. A good business credit score shows that you’re fiscally responsible and allows you to get much-needed capital into your business.
If you need to get a loan to purchase equipment or property, you’ll need to have a good business credit score.
Corporate cards make it easy to track business expenses. You have control over employee spending, especially if you have employees that travel regularly. You can set limits for employees and create a simple expense approval process.
You can turn off business credit cards for employees when they’re not on the road. That limits fraudulent transactions.
Just like small business credit cards, you can earn rewards for corporate spending. The rewards go to the company. You can use the rewards for employee incentive programs.
Corporate credit card holders often have immediate access to a customer service rep if there are any account issues. This saves time from having to be on hold and wade through an automated system to reach someone.
- Corporate Credit Cards for Financial Management
As your business grows, you need to find ways to manage business expenses. Corporate credit cards are among the best financial tools you can use.
It’s much easier to budget and manage business expenses. Corporate cards also streamline the employee purchase approval process. In the end, your business saves time and resources.
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