When to get a business credit card
Learn about the benefits of business credit cards, how they work and how to choose the right credit card for your business.
Dec. 09, 2024
3-minute read
A business credit card can be a valuable financial tool for businesses of all sizes. It not only helps separate business expenses from personal expenses, but can also fuel your business growth. Explore how business credit cards work, the benefits of having one and when it may be the right time to get one.
How business credit cards work
Business credit cards are similar to personal credit cards, but they’re specifically designed for business-related expenses. Here’s how it works:
- Application: You’ll need to provide details about your business and personal credit history. Learn more about how to apply.
- Credit: Once you’re approved, you’ll be given a credit limit based on your business’s creditworthiness and financial health. If your business is new, this is most often based on your personal credit history and financial responsibilities.
- Expenses: You can use your card to pay for business-related expenses such as supplies, travel and utilities.
- Rewards: Many business credit cards offer rewards, such as cashback, travel points and discounts on business services.
Benefits of using a business credit card to separate expenses
Keeping business and personal expenses separate is crucial for several reasons.
1) Simplified bookkeeping
Using a business credit card ensures that all business expenses are recorded separately, making bookkeeping and accounting more straightforward. During tax season, having clear records of business expenses can simplify the process and ensure you claim all eligible deductions.
2) Financial management
A business credit card can help you track and manage business spending more efficiently, allowing you to create a budget and control your expenses. Access to credit can also help you manage your cash flow. Plus, having multiple cardholders allows you to track employee spending versus expense reports. You can also enrol for Visa Spend Clarity for business, a secure, web-based, user-friendly reporting application that helps you track your business’s balances and transactions and manage expenses more efficiently.
For more information, read our article about why you should consider a business credit card to keep track of your business’ spending.
3) Rewards and business benefits
Most business credit cards have rewards programs that can help you save, earn and redeem points and get other business perks. Taking advantage of these benefits can help you make your spending work for you.
4) Professionalism and building credit
Using a business credit card enhances your business’s professional image and credibility with vendors and clients. Regular use and timely payments may help you build your business credit profile, which can be helpful for future financing needs.
When and how to get a business credit card
You can get a business credit card at almost any point in the life of a business. If you’re launching a new business, a business credit card can help you manage initial expenses and build business credit during the startup phase. If your business is established, you'll notice that as your business grows, so do your expenses. A business credit card can provide the necessary funds to manage this growth efficiently. And if you're well established and making frequent business-related purchases, a business credit card can streamline these transactions and offer valuable rewards. When accurate expense tracking becomes essential, a business credit card can simplify this process.
