7 Reasons Your Small Business Needs a Credit Card

Many people who start a new business think that they can avoid going in to credit card debt. It’s certainly true that there are other means of obtaining money for your business. You can get investors to give you cash loans, you can open up a business line of credit and you can use other methods to reduce the amount of money that would need to go on a credit card when launching a small business. However, at some point, your small business is going to need a credit card. And it really makes sense to get one sooner rather than later.

Here are seven reasons that your small business needs a credit card:

1. You are going to have ongoing business expenses. The amount of money that you make in any given month is going to vary over time. Sometimes you’ll have plenty of cash to pay for the things that your business needs out-of-pocket. Sometimes you won’t. Having a credit card is going to make it easier to figure out how to pay for ongoing business expenses even when there isn’t the right amount of money coming in to cover those costs.

2. Credit cards make it easier to track spending and facilitate better accounting. When all of your business expenses are placed on a credit card, it’s super easy to see how much money you’re spending on the business. This is important for budgeting and financial planning. It is also useful when reporting earnings for taxes.

3. Your business needs a credit history. There is going to come a time when you want a big loan for your business. Perhaps you’ll want to open up a new office. Maybe you’ll want to purchase a big chunk of equipment. In order to grow your business, you’ll need to be able to borrow the money that the business needs. It is a lot easier to qualify for a business loan when you have already established a credit history for the small business through the responsible use of a business credit card.

4. The business can benefit from credit card rewards. Frankly, it’s always nice to get a little something back when you spend money. A business credit card that comes with a rewards program can give back to you in this way. You can use the business credit card to accumulate travel points or cash back which ultimately means that you’re spending less in the long run simply by using the small business credit card.

5. The business credit card enhances your credibility and reinforces your professional appearance. The small business often struggles to be taken seriously in the dog-eat-dog world of big corporations. The professional image is pretty hard to uphold when you go to a business lunch meeting and can’t even take out a professional credit card to pay for the meal.

6. You and your small business should be separate things financially. Many people who own their own small business just go ahead and put all expenses on their own personal credit card. This can be financailly confusing. It can also cause problems down the line if you encounter legal issues with the business. You don’t want to be personally penalized for business problems so you should have all business expenses on a separate small business credit card.

7. You might need it. You just never know when a business emergency will come up. It’s better to have the card and not use it than to need it and not have it.