You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author’s alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.
When you were growing up, your idea of a business was probably the company your parents worked at, or perhaps your favorite neighborhood store. But these days, it seems like nearly anyone can own a business, even if it’s just a side hustle or two.
Our connected economy makes it easy for everyone to start a new business, but when it comes to accounting and filing taxes, we still have to play by all the old rules that date back decades. Thankfully, the right credit cards can make it easier to manage your business expenses.
How small business credit cards work
Most major credit card issuers offer credit cards designed for small business owners. To qualify, you only need to operate a business of any size.
For example, you could be re-selling things online, running a dog-walking service, or offering your expertise as a freelance consultant. You don’t even need to incorporate. You can be a sole proprietor, have a partnership or operate a Limited Liability Corporation (LLC).
To apply for a small business credit card, you must supply your personal income just like you would with your personal credit card. That’s because a small business credit card requires your personal guarantee of repayment, just like your other credit cards.
The advantages of using a small business credit card
When you add a small business credit card to your wallet, you instantly have a way of separating your personal transactions from your business expenses. But let’s see what else they can offer.
Rewards for your business
A small business card can offer you rewards that may be more suited to your business purchases than your personal ones.
For example, the Bank of America® Business Advantage Cash Rewards Mastercard® offers three percent cash back for purchases at office supply stores and gas stations. That’s a higher rate than you’d get with most other cash back cards, so if your business requires a lot of office supply purchases, this might be a great way to save. To round out the offering, the card also features two percent cash back at restaurants and one percent back elsewhere.
Another advantage of having a small business card can be the greater tracking and reporting features. For instance, the Capital One® Spark® Cash For Business card offers quarterly and year-end summaries, and you can create a custom, itemized report of your spending.
This offer requires Excellent/Good credit.
- Earning unlimited 2% cash back could mean thousands of dollars each year going back into your business
- Plus, a one-time $500 cash bonus once you spend $4,500 on purchases within 3 months from account opening
- Use Spark Cash across all your business spend, with no categories to limit your purchasing
- View Capital One® Spark® Cash for Business details and how to apply »
This helps you when you need to plan your business, create a budget and file your taxes. The Spark Cash also offers an impressive 2% cash back on all of your purchases, with no limits.
Check out some other Capital One® Business cards!
Financing your business
Finally, a small business credit card can offer you a means of financing your business. First, adding a small business credit card gives you increased purchasing power beyond your personal credit cards.
In addition, a small business credit card can offer new accounts the interest free financing you may need to get your business off the ground. For example, at the time of publication, the Chase Ink Business Cash℠ credit card offers 12 months of zero percent APR introductory financing on new purchases and balance transfers.
Once the interest free promotional financing offer expires, you can still use your small business credit card to finance purchases, but it’s never a good idea to carry a balance over the long term. Remember, you will personally be responsible for repayment, even if you decide to close down your business.
Do you have to use a small business credit card to separate your expenses?
There’s nothing that says you must have a small business card to keep track of your expenses—it’s just a useful tool for doing so.
You can certainly charge business expenses to your personal card, or personal expenses to your business card, but then you’ll be creating more work for yourself (or your accountant) when it comes time to do your taxes.
However, there are times when it will make sense for some people to mix expenses around in order to earn the additional rewards offered. For example, some families might use their small business credit card to earn extra rewards when they purchase back to school supplies at an office supply store. So long as you remember to separate those expenses from your business ledger, there’s nothing wrong with doing so.
All small business owners need to find the tools that will best enable them to make profits and grow their company. A small business credit card is just another way to help you manage your business, and perhaps earn some rewards on the side.