Running a small business is more expensive than many people realize. The average cost of starting a small business was $35,000 in 2022, and that's for an online-only business. Business owners who rent a physical storefront spend an average of $100,000 in the first year.
There are plenty of ways to cut costs and bootstrap it, so you certainly don't need to spend that much. But every business has its fair share of expenses, and you'll need a way to pay for them.
While some small business owners use their own personal credit cards, that's not a good idea. When you have a business, you should get a business credit card, for a few important reasons.
1. Keep business expenses separate from personal expenses
When you use the same account for personal and business expenses, things get messy. It will be more complicated and time-consuming to review business expenses later. If you want to see how much money your business is spending, you'll need to filter out your personal expenses first. The same is true if you want to check for tax deductions.
Business insurance selection guide
Choosing the right small business insurance is essential for protecting your assets and ensuring your operations run smoothly in the face of unexpected events. It’s about finding coverage that fits your specific needs and provides peace of mind as you grow. The tool below is designed to guide you through the selection process in a friendly, straightforward manner, helping you secure the perfect insurance plan that safeguards your business’s future.
A business credit card makes your life much easier. All your business spending will be on a separate account, so you can more quickly sort through transactions and see what you'll deduct from your business taxes. Many business credit cards also include detailed spending reports and other helpful features, such as integration with popular business accounting software.
2. Earn rewards on your business spending
If you have a good credit score, you'll probably qualify for business rewards cards. Just to be clear, this is referring to your personal credit score. Card issuers still check this on business credit card applications. You don't need a business credit score to qualify for a card.
Why a Business Credit Card Could Transform Your Small Business
These business credit cards that offer a convenient and efficient way to separate personal and business expenses, simplifying accounting and tax reporting.
Additionally, business cards can provide valuable perks such as rewards points, cashback, and expense tracking tools, enhancing financial management and the potential to help save money in the long run.
| Offer | Our Rating | Welcome Offer | Rewards Program | APR |
|---|---|---|---|---|
Ink Business Unlimited® Credit Card Apply Now for Ink Business Unlimited® Credit Card OnChase'sSecure Website. | Rating image, 4.50 out of 5 stars. 4.50/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Earn $900 bonus cash backEarn $900 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening. | Earn unlimited 1.5% cash back on every purchaseEarn unlimited 1.5% cash back on every purchase made for your business | Intro:0% Intro APR on Purchases Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A Regular:18.49% - 24.49% Variable |
Ink Business Cash® Credit Card Apply Now for Ink Business Cash® Credit Card OnChase'sSecure Website. | Rating image, 4.50 out of 5 stars. 4.50/5Our ratings are based on a 5 star scale.5 stars equals Best.4 stars equals Excellent.3 stars equals Good.2 stars equals Fair.1 star equals Poor.We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. | Earn up to $750 bonus cash backEarn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening. | Earn 5% cash back in select business categoriesEarn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other card purchases with no limit to the amount you can earn. | Intro:0% Intro APR on Purchases Purchases: 0% Intro APR on Purchases, 12 months Balance Transfers: N/A Regular:18.49% - 24.49% Variable |
Business rewards cards are a simple way to earn cash back or travel points on your business spending. This can be a sizable amount back. Some business cards earn a flat rate of 2% back on purchases, no matter the spending category. There are also cards with a lower base rate (normally 1%), but rates of 3% more in bonus categories.
Let's say you open a business card that earns 2%. Your business spends $100,000 per year. That's $2,000 in cash back every year that you could reinvest into your business.
3. Build your business's credit score
Business credit scores work in much the same way as personal credit scores. There are three major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. You'll need to apply with Dun & Bradstreet to get a business credit score with it. Registration isn't required with Equifax and Experian.
These bureaus will calculate a credit score for your business based on the information they receive. If you use a business credit card and pay the bill on time, that will help build your business credit score.
You'll need a good business credit score if you decide to apply for a business loan in the future. Even if you're not planning on that at the moment, it's good to have the option.
4. Boost your spending power
With credit cards, it's to your advantage to pay the bill in full every month. If you do that, you won't be charged interest on your purchases. This is true with personal and business credit cards.
But there is a way to finance purchases on a business credit card without paying expensive interest charges. Some business cards have a 0% intro APR on new purchases. During the intro period, you're not charged any interest on purchases you've made. You only need to make the minimum payment.
For example, if a card has a 12-month 0% intro APR on purchases, then you have a year to finance purchases interest-free. A word of caution: The APR goes up to the card's standard rate after the intro period ends, so aim to pay off your balance before then.
Opening a business credit card
It doesn't take long to open a business credit card. Start by picking the card you want -- you can find suggestions on The Ascent's list of the best business credit cards. I recommend figuring out the features that are most important to you first, such as cash back, a 0% intro APR, or travel rewards, to narrow down your choices.
Choose the option to apply for the card. In the application, you'll need to provide your personal information and business information. If you haven't registered your business, that's fine. You can apply as a sole proprietor, meaning you apply with only your Social Security number and no Employer Identification Number (EIN).
A business credit card is a valuable financial tool that every small business should have. And the application process is straightforward, once you've found a card you qualify for. Open yours early on and you'll have a convenient way to handle all your business expenses.
