Business Credit Cards Explained

Business credit cards are obtained by companies, large and small, to be used for the purpose of purchasing goods and services needed by the business.
They provide an easy means of running the financial end of the day-to-day operations.
A business credit card is used in much the same manner as a personal one.
It is used to make purchases or bill payments.
A billing statement is sent on a monthly basis with a minimum payment due.
Interest is charged on any unpaid balance.
Additionally, late fees are charged when payment is past the due date.
The business owner completes an application for an account.
Once he receives approval for the account, he receives a credit card with an account number, the name of the business company, and the expiration date imprinted on the card.
Larger businesses typically obtain multiple cards for the same account so that employees can also use the cards to make business-related purchases.
This strategy provides an easy method of tracking employee and company purchases.
In fact, business credit cards that are provided to employees can have lower credit limits attached to them as well.
The primary difference between a personal credit card and a business credit card is that the business account should not be used to make any personal purchases or payments whatsoever.
The second major difference is that a business owner uses his EIN or the identification number provided by the IRS for his business company in order to obtain the business credit card account.
In order to obtain a personal credit card account, the individual uses his social security number.
Using a business credit card responsibly will lead to a positive credit history for the company.
Continuing in this train of thought, once the credit reputation of the business develops on a positive level, the owner of the company might be able to request a higher credit card limit as well as lower interest rates and fees.
Activity on an account creates a credit history for the business.
It does not influence the personal credit history of the owner.
Therefore, even if the company is struggling to meet its financial goals, any detrimental change in the credit history of the business will not adversely affect the personal credit history of the owner.
Business credit cards offer many other benefits as well.
They provide easy access to spending information, the ability to purchase items 24 hours a day, and online payment options.
Additionally, a business credit card can provide a new business with a sense of legitimacy that can promote its successful growth through newly gained contacts and customers.