Business Credit Cards for Startups

When you start a business, you have many decisions to make about how you will operate. To run your business, you need funds. Business credit cards for startups help you access the day-to-day funds that you need.

How to get a business credit card

Getting a business credit card is simple for startups. But, it’s important to take your time through the process. Shop around for a credit card company and type that fits your needs. Also, be sure to read the terms carefully before accepting. There are several steps you should take before you apply for a business credit card.

Check your personal credit score

Since your startup doesn’t have credit, creditors look at your personal history. Good credit helps you get approved for a lower interest rate and higher spending limit. But, your application could be denied if you have poor personal credit.

Consider your business structure

Business credit cards are affected by the different types of business structures. If you’re a sole proprietor, you may need to incorporate. The application may require a tax ID number that is not your Social Security number.

It is also a good idea to incorporate to protect your personal assets. A corporation is a separate entity from the owner. If your business defaults on payments, creditors cannot seize your personal assets. If you’re not incorporated, and the business defaults on payments, your personal assets are at stake. Business credit cards without personal guarantee are great for building business credit without taking on this amount of personal risk.

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Fill out a credit card application

Look at several different credit cards before choosing your application. The application includes basic information about you and your business. Once you complete the application, submit it. The credit card company reviews your information while you wait for approval.

Benefits of business credit cards for startups

There are advantages for when you get started and as your business grows. To see benefits in your business, you need to keep up with your payments.

Build business credit

Getting financing for small business ventures is a lot easier if you’ve taken the time to build strong business credit. Creditors may offer you a higher line of credit.

But as a startup, you don’t have business credit. You build credit by paying debts on time. If you keep up with your payments, a business credit card can help build your startup’s credit.

Help track expenses

Business credit cards for startups keep personal and business expenses separate. It can be hard to identify what purchases are personal expenses and what are business expenses when you have one, combined record. Combining financial records makes it increasingly difficult to know your company’s true financial figures.

But, a separate business credit card gives you access to a statement with only business expenses. You can match your credit card statement to your online accounting records to be sure your financial data is accurate.

A business credit card statement is also helpful during tax time. When you file taxes, you need to report your company’s income and expenses. When your business expenses are already compiled on a credit card statement, it may be easier to report information.

Shared access to funds

You can authorize others to use your business credit card. By authorizing several card users, you can save time and delegate tasks.

For example, if you own a construction company, you could authorize an employee to use the business credit card. The employee can go to the hardware store and pick up supplies with the card. You don’t need to keep running out for materials. Instead, you can focus on running and growing your business.

Do you need a simple way to track your small business’s expenses? Try Patriot’s online accounting software for small businesses for free today.

This article is updated from its original publication date of April 7, 2016.

This is not intended as legal advice; for more information, please click here.

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