You may be wondering if you`re even eligible for a business credit card if you don`t have your own business (at least in the traditional sense). For many people, the answer is yes. Even if your LLC has not done business in the past year, you may still need to file a federal tax return. Some maps even offer special features and tools to support cost tracking. For example, the American Express Business Gold Card and the American Express Business Platinum® Card offer cardholders access to the American Express®® Business app, which allows you to use your phone to take a photo of receipts and match them to card transactions, which could go a long way in helping you track your business spending. American Express is a CardRatings advertiser. Some categories of bonuses, such as travel and restaurant expenses, are common on private credit cards and small credit cards. The preferred practice is to obtain a separate credit card in the name of the company. However, if for some reason this is not possible or desired, an alternative is to have a specific personal credit card that you only use for business. «Even the best credit cards have high interest rates,» says Brian Cairns, founder of ProStrategix Consulting. «If you use them for purchases that you`re going to pay for in one to three months, they`re fine. If you take on debt that requires you to carry forward balances longer, you may have other business problems.
In that case, I wouldn`t recommend a credit card, and you probably wouldn`t get one with a good reputation. «If you`re like many sole proprietors, you may be wondering if it`s better to apply for a corporate credit card or if your personal credit card is enough. Below are six benefits of business credit cards that will have a positive impact on the growth of your business. Use alternatives and set rules. «Many companies, especially with sales reps, reimburse the company`s personal credit card expenses with excellent responsibility — that is, without a receipt, without refund,» Burton says. However, it helps to have clear rules about who gets a card, whether based on seniority, position, or other factors. This can help avoid confusion and alleviate the bad feelings of employees who want a card but are not eligible. If you rely on a small business credit card to improve your personal credit score, be sure to use one that falls under the consumer and commercial offices. Key Takeaways: Just like a personal credit card, a small business credit card can be a great tool when used strategically and with restraint. Between the endless billing cycle and the breathless wait for the check that arrives in the mail, self-employed workers who want to mitigate the financial ups and downs that come with self-employment should consider a specific option: a small business credit card.
When used responsibly, a small business credit card allows you to invest in resources that will help your business grow when you may not have money available. There are also other advantages. Here are five reasons why freelancers and other self-employed workers should consider a small business credit card: Business credit cards often come with higher lines of credit, as do many small businesses that start. Keep in mind that the difference between business credit cards and credit cards is that you have to pay your bill in full each month, otherwise there will be a high fee that will likely void the value of points or miles earned. Registration is required for some services. Applying for a business credit card usually involves the same process as for a personal credit card. If you operate your business as a sole proprietorship, you may need to provide your Social Security number unless you have obtained an Employer Identification Number (EIN) for a partnership, LLC, or business. One of the most important ways business credit cards blow up personal cards is to get better income rates in more bonus categories. For some cards, these categories are specifically related to business, while for others, you can use them for a variety of daily expenses.
Here are two examples to prove it. Don`t use a business credit card to make risky purchases. If you are unable to repay the balance, you will be charged interest and other fees may apply, which will increase your debt. Companies, LLCs and other business units require a registered representative. In fact, in many cases, it is required by law. Buyer protection. With most cards, you have the option to dispute unreasonable charges on the account and avoid payments until the dispute is resolved. Many credit cards offer some form of purchase protection in case the goods you buy are lost, stolen, or not delivered. While you`ll find many business cards that offer travel or restaurant bonus categories that overlap with personal credit cards, you`ll also find many unique categories that are clearly aimed at businesses rather than consumers. One of the best reasons to get a business credit card is to separate your business purchases from your personal purchases. This will greatly facilitate the tax period.
But it also usually means that your company`s financial activity is listed on a credit report separate from your personal activity. Small business credit cards often have more purchasing power than personal credit cards. In part, this is because the limits are based on both personal income and business turnover, among other factors like solvency. Earnings that are greater than your income may result in a higher limit than you would get on a personal card where you only report personal income to which you have a reasonable expectation of access. It earns 3 points per dollar on all other purchases. The difference between the two cards is that the personal card deserves a supermarket bonus, while the business card earns a bonus on a variety of travel expenses as well as typical work-related purchases. So if you`re flying and renting cars or spending a lot on shipping and Wi-Fi instead of just grocery shopping, you can really increase your income with the Hilton Honors American Express business card. Using multiple cards to pay all of your company`s bills and suppliers is financially risky. Commit to using only one card.
With a single credit card, you can more accurately manage your expenses and monitor your credit status. Business credit cards can be difficult to manage. Three problems with business credit cards are: It makes record keeping much easier when it comes to taxes. With a business credit card, you can easily view your overhead and list as many deductions as possible. Every sweep is an opportunity to reduce your taxable income, and most credit card companies and banks that offer these cards allow you to export your monthly or annual statements that you can send to your tax advisor when it`s time to file your annual tax return. According to the Freelancers Union`s 2020 survey, about 59 million Americans, or 36 percent of the U.S. workforce, are freelancers. For those of us who have abandoned grind 9-5 in favor of the freedom and flexibility that come with self-employment, managing the small commercial banking part of freelancers can be the hardest part of the journey. Some small business owners may be reluctant to apply for a card. Why spend money you don`t have? However, when used strategically, credit cards can be useful for small businesses. Here are three benefits that business credit cards offer: A higher limit could be especially useful if your business has high operating costs – for example, if you spend a lot on inventory each month.
Applying for business credit cards allows you to get a whole bunch of new bonuses. Without a good system, it can be difficult to track credit card spending and track it, which ultimately affects your bottom line. There are some strategies that can be used to ensure good credit card practices. It`s easy to push all your expenses, personal and business, on the same credit card for simplicity. In the unfortunate event that you are subject to an IRS audit, it may be beneficial to have your credit card statements as a backup. It`s certainly best to keep receipts in a shoebox (although any good accountant will always tell you that it`s best to stick to them for at least three years). Take, for example, the United℠ Explorer map. It currently offers a welcome bonus of 60,000 bonus miles after spending $3,000 on purchases in the first 3 months of opening the account. In contrast, the United℠ Business Card offers a welcome bonus of 75,000 bonus miles after spending $5,000 on purchases in the first 3 months of account opening. In addition, the United Business Card offers members 5,000 anniversary bonus miles if they also have a personal United credit card such as united explorer. If your business revolves around activities where even a minor breach is likely, you should consider using a safe agreement.
Find out how AHHs can protect you from liability. As a bonus, many business credit cards make it easy to export your transaction history to QuickBooks or any other accounting software. Just as opening a business credit card is one of the first steps in starting your business, it can also help you create a credit history for that business. A good credit score can help you secure financing and negotiate payment terms with suppliers in the future. If you need to take out a loan or mortgage for the business, banks will specifically look at your business credit report and history, and a positive outlook can help you get better interest rates. Access to credit and lines of credit is critical to growing a business. However, to get that access, it`s important to build your business credit so you can manage cash flow and better access financing when you need it without compromising your personal credit. A good business credit score can mean access to better financing by showing lenders that it`s worth investing in your business…