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How do business credit cards work
Dec 16, 2024 | 5 minute read
Use business credit cards to simplify expenses and protect your assets.
If you are looking for a business credit card for the first time, get a head start by learning the basics, so you can hit the ground running when it’s time to shop around.
There’s no better feeling than when your small business starts to take off. Whether you’ve just registered your business with the state or you’ve gone from pop-up to brick-and-mortar, hitting these kinds of milestones takes your dream to a new level. But as any entrepreneur knows, business growth and financial demands go hand in hand. This is why many small companies rely on business credit cards to help keep things running smoothly. Small businesses can take lots of different shapes, so it makes sense that business credit cards are designed to suit a variety of needs.
How do business credit cards work? Essentially, they are like personal credit cards but offer features tailored for business use, such as higher credit limits, expense tracking, and rewards on business related purchases. If your business is a passion project, such as a boutique that you can execute alone, you may not need the same type of card as a business with 50 employees. Here we share some best practices and considerations as you weigh what a business credit card could mean for you, so you feel prepared to shop, apply and give your small business a boost when the time is right.
What makes business credit cards different
A business credit card isn’t the same as a personal credit card. It has different functions and features designed for business purchasing. Business credit cards generally have higher limits and specific rewards that you might not find on a personal credit card. Phone bills, office supplies and gas station purchases are common categories for which business credit cards offer spending rewards. Many banks will also send an itemized report of your spending at the end of the year to make tax filing simpler.
Business credit cards also help keep your personal and professional finances separate. Good rule of thumb: you’ll know business credit cards are a good option when your business spending starts growing and getting more complex.
What business credit cards can help you do better
Business credit cards are a long-term option to help make running your business easier and help with cash flow. Maybe you have growing inventory costs, machinery in need of repair or replacement or an international business trip coming up. Business credit cards can be a lifeline in these situations.
And while they may seem like a nice-to-have, business credit cards with rewards shouldn’t be overlooked when considering opening an account. Rewards can add up quickly when you're using your card for regular business purchases. Having a credit card for your small business can make tax season easier, too. The itemized report of your yearly spending means you don’t have to spend weeks going through old receipts when it’s time to file.
Just like being strategic about key purchases for your business, a good rewards program can go a long way, especially if you use your credit card to make payments, and route payments from customers to the same account.
8 benefits of a business credit card
- Business credit cards give you access to unique rewards personal credit cards may not offer.
- You can build credit for your business so you'll be better positioned to apply for loans.
- They come in handy for recurring inventory costs.
- Your chances of getting approved for a card are good even if you have little to no business history.
- Different kinds of cards work better for different kinds of businesses. We have multiple options to meet your unique needs.
- You can use business credit card rewards to offset other business expenses.
- Business banking specialists and U.S. Bank branch managers are there to help you at any time.
- You can use business credit cards in place of checks, ACH and debit cards to help protect your business from checking account fraud.
Now that you know the benefits of what a business credit card can do for you, you'll be able to make an informed decision when it's time to choose a credit card for your business.
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