11 Reasons to Carry Out Transactions with a Business Credit Card
Business credit cards provide that much-needed liquidity to your business. Unlike personal credit cards, these are tailor-made for business purposes with distinct advantages not found on other cards. The process for getting a business credit card is similar to a personal credit card. The business credit cards carry a nominal annual fee offering several rewards and returns.
If you are running a business as a sole proprietor, you can apply for a business credit card using IT returns, GST returns, bank statements, etc. Some business credit cards are secured & backed by a bank deposit or collateral. If your company has an excellent track record, you can also apply for an unsecured credit card. Different varieties of a business credit card are available with offers, credit limits, and schemes.
Whether you are operating the business as a sole proprietor, private limited company, or partnership, having a business credit card provides additional funds, purchase protection, convenience, and ease in running your business.
Here are some ways you can benefit by utilizing a Business Credit Card –
1. Higher credit limit– Credit card for businesses provides a higher credit limit to manage deficit working capital. In case of immediate need for funds, business credit cards provide support to the business.
2. Boosts your credit score– If you use credit cards in a disciplined way for business and pay the bills on time, it boosts your credit score. Regular payment of credit card bills on time improves your track record and makes you eligible for borrowing higher loan amounts.
3. Control on spending– As credit cards come with a limit, businesses can make efforts for cost control and spending. You can keep a check on the spending of employees by setting a lower limit on credit cards.
4. Offers and discounts- A business credit card offers several rewards and discounts on business travel and shopping. Apart from attractive discounts, you can earn cashback
and reward points on every rupee spent. Credit card transactions done on business travel make you earn travel credits, discounted air tickets, air-lounge memberships, waived airline baggage fees, frequent-flyer discounts, car rental discounts, general cashbacks, or meal coupons.
5. Separate business expenses from personal expenses- If you are a sole proprietor, it becomes easy for you to separate business and personal expenses with this business credit card. When you have different cards, you get two credit card statements that make it convenient to file income tax returns. It is quite suitable for a self-employed individual running a small business or a start-up.
6. Accounting for expenses –Using a business credit card makes accounting and tax filing easier with sorting and categorization of expenses. Many business credit cards provide a breakdown of expenses such as office meals, purchases, miscellaneous expenses, hotel bills, office supplies, etc.
7. Better features– A business credit card offers much better features than a personal credit card. You can expect to avail lower rates of interest, discounts, higher credit limits, longer grace periods, etc.
8. Cards for employees– When you own a business credit card, you can easily obtain cards for your employees. You can set a spending limit for each employee and avoid overspending. Providing credit cards to employees makes it easier to conduct business and manage quick decision making.
9. Managing deficit in working capital– At times, when your current liabilities are more than your current assets, it leads to deficiency in working capital. To meet the sudden liquidity requirements, business credit cards become an ideal choice. You can also avail the facility of credit card loans at a lower rate of interest. Taking a loan on credit card is much cheaper than a business loan or a personal loan. Credit card loans are ideal for dynamic businesses. You can also convert your credit card bills into instalments at a lower rate of interest.
10. Purchase Protection- Business purchases are made in bulk. With a higher limit credit card, you can make larger purchases with purchase protection. In comparison to personal credit cards, you can make more expensive purchases with business credit cards. Procurement tasks undoubtedly become easier with business credit cards.
11. Easier than loan formalities and eligibilities- In businesses, fund requirements are immediate. Loan disbursement for business is a time-consuming process with several formalities. Business cards provide instant loans on transactions at a lower rate of interest. With no formalities, you can avail the facility of instant loans on your business credit card. You can also foreclose the loan by paying low pre-payment fees.
Business credit cards have become a convenient solution for the immediate need of funds in any business. During the peak season, businesses earn surplus cash. However, in the off-season, due to reduced cash flows businesses need instant funds for procurements and accounts payable. Not only do business credit cards provide credit, but also attractive benefits for transactions made through them. Businesses can easily manage the cash deficit with credit cards, pay bills on time and improve their credit score. With flexibility in payments, business can make bulk purchases and make payments of bills through accounts receivables.