The world is no longer just run by multi-billion dollar conglomerates or mega-rich MNCs. Plenty of startups have now joined the fray to take a fair share of the spoils with them, while bringing innovation in the business sphere to a whole new level. Unlike the major corporations, these young businesses operate on entirely new ethos, embodying the values of their 20-something founders. Besides, these firms incur expenses on a significantly lower price scale compared to the bigwigs.
Herein come business credit cards - the new kid on the block - to help small businesses take care of their day-to-day expenses. But, nobody really has asked the few basic questions about them, their scope, or their usefulness.
In this article, we aim to cover a few key topics and also shed some light on various aspects of the cards that people might know less about.
1. Business Credit Cards - What they are and how they differ from regular credit cards
As the name suggests, business credit cards are those used to take care of everyday expenditures arriving out of a business operation.
While just about anybody with a steady flow of income can apply for a credit card, the eligibility criteria to get a business credit card differs. To begin with, these cards are available for small businesses, banks government-run establishments, and sole proprietorship companies.
Besides, applicants need to show their revenues in order to be able to get these cards. Further, the benefits of these cars are two pronged, wherein both the employer and the employee stand to benefit from one of these. For instance, the employer can track their expenses and do a clear analysis, while employees can do cashless transactions.
2. The pros of using Business Credit Cards
There are actually a number of benefits to using a business credit cards, check bankbazaar for more detail.. In fact, sole proprietorship companies, more so than other, will stand to benefit for this.
- Personal Vs. business expenses
Businessmen are required to file taxes every year, which as it is, can often be a nerve-wracking experience. Now, imagine having to go through their personal credit card history to zero in on the expenditures they made for their business, and then justifying them in the tax forms. A dedicated business credit card, in this case will help minimise the fuss and maximise transparency.
- Better credit limit
When it comes to traditional credit cards, the credit limit is determined based on the cardholder's income. This would mean that the limit offered to them may not be sufficient to match their business requirements. On the flip side, a business credit card comes with a much higher credit limit, which an employer can use to run their business better, without much lags.
- Multiple expenses
A business credit card can be used to handle a variety of expenses, ranging from utilities, travel, entertainment, business maintenance and the like. Now, you may counter that a regular credit card can do most of these. Business credit cards allows the cardholder to block certain type of transactions.
3. These are what make for a good business credit card
There are plenty of factors that go into making the best business credit card for you. Here, we take a look at a few of them:
As things stand, credit card holders opt for credit cards to take advantage of the plethora of the rewards that come their way. The same applies for business cards as well. Usually, most of these cards offer cashbacks, discounts, and flier miles upon purchases and booking. In case, you are looking to own a business card, consider all the available ones and weigh up the rewards offered by each of them.
- Customised offers:
When it comes to a business, the expenses one incurs are often, but not always, uni-directional. Let's say, if a business requires a lot of stationeries to manage the usual day-to-day operations, you should look at cards that can offer you better deals for said such purchases. The more customised offers you get, the better the card is for you and the more efficient your business runs.
- Additional perks:
Let's say a business in question is into sales and marketing, and the job involves travelling both domestically and internationally. In such cases, having a card that offer lounge access (in case of air travel) or extra discounts on hotel bookings makes a lot more sense. So, look for one that comes with such better propositions.
4. Silly myths about Business Credit Cards you should ignore
As is with almost everything in life, there are a few myths about business credit cards. These are some innocuous, falsified word-of-mouth spread by the regular joes. Let's take a few of those:
- Only major corporations can get a business credit card
This is the most commonly heard of misconception about business credit cards. To set it straight, these cards can actually owned by just about anyone with a legitimate business. All the banks require of a prospective customer is an application and the company's recent profit/loss statement. In fact, there are plenty of companies with 50-odd employees, who own a business credit card.
- Personal Credit Cards have better perks and rewards
Well, this myth is only half true. A business cards offer just as many benefits, if not many, compared to personal credit cards. To further this point, business cards come with better perks, one that is tailored for a specific type of usage.
- Business credit cards come with hefty joining fees
Not true. To the contrary, one may even find cards in the market, which don't come with a joining fee at all. If you still hold this belief, a simple research could dissuade you of them in a few minutes.
In all, business credit cards aren't just a more convenient way of keeping expenditures in check, they even help bring a level of transparency and accountability into the operating end of a business.