Is Business Credit Card Helpful
Is a business credit-card helpful?
'Yes'.. That is true at least for most businesses (particularly small businesses). Before we dig deeper into how business credit-cards are helpful, let us explain what a business credit-card is.
In short, a business credit-card is a credit-card that is owned by a business and not an individual. To understand this better, you can draw an analogy between the business credit-cards and business bank accounts, which are in the name of the business too. Other than that, business credit-cards work in pretty much the same fashion as the personal credit-cards; with a few exceptions.
These exceptions are in the form of flexibility in credit limit, low APRs and a few other additional benefits that are available to business credit-cards only.
Even from just that, business credit-cards seem a good proposition. In any case, business credit-cards would be attractive even without those benefits because the main boost lies elsewhere.
The big-big boostfrom a business credit-card is realised in terms of business expense accounting. For most small businesses, business expense accounting is a big overhead.
With business credit-cards, this is handled very easily – you just have to ensure that you make all your business expenses on your business credit card and let the personal expenses be on the personal credit-card e.g. segregation of business and personal expenses is all you need to do.
So the bill for your business credit-card will have all the business expenses on it and you wouldn't need to collate all the various bills or sort out the items from your personal credit-card bill.
The key here is to be certain that you use your business credit card for all your business expenses (or as much as you can). Further, a lot of business credit-card suppliers realise this need of small business and even organise the business credit-card bills in a way that meets the accounting requirements of these businesses.
So mostly, they will appropriately group the expenses on the business credit-card bill so as to facilitate business expense accounting. In reality, a few of the business credit card suppliers go to an extent of providing the bills in a format that can be downloaded and exported to an accounting system for instance you do not need to enter the data manually in your accounting system.
In case the format isn't suitable for your accounting system, you can hire a software professional to write a small quick program to convert it into a suitable format.
Thus just one reason - 'facilitation of business expense accounting', is enough to support the case of small business credit-cards.