We have seen those movies and TV shows where the lead takes the company American Express credit card and goes shopping on her business day, and say “Put it on my card.” As a business owner who must have thought wow one day, I will too have a credit card for my business and recreate this exact scene.
Just like all things on TV, this is not reality, and if you are not cautious about your card transactions you will be in a lot of trouble!
Getting a Business credit card from a well-trusted credit card company is a great superpower, and as we all know Great power comes with great responsibility. And the great responsibility here is making sure You don’t miss your credit card payments.
All the hows will be answered in this blog, but first, let’s see the list of credit card networks best suited for Indian business owners.
List of credit card companies for Indian business owners.
- American Express platinum corporate card.
- HDFC Business Money-Back credit card.
- ICICI Bank Business Advantage credit card.
- Axis Bank Corporate credit card.
- SBI corporate credit card.
- Standard chartered corporate card.
All the above-mentioned cards have different benefits and Different card payment plans, before investing in a credit card make sure that the card’s plans and features are useful for you and your business.
Now, that you are aware of different cards let’s learn how to use the power with responsibility.
1. Choose the right card.
In all our favorite movies and TV series, there is always a chosen one, This chosen one can make or break the universe!
A credit card for your business is similar to that hero, hence choose with caution.
For e.g, if one card has a high card processing fee but has amazing benefits for International travel and you have a business that requires you to travel a lot, Investing in that card makes sense for you, But for someone else, that card becomes a liability.
On the flip side if another card has great average merchant discount rates, but doesn’t give any travel benefits, this can be a perfect fit for a brick-and-mortar business.
It all depends on the type of business you have and your business needs, remember a card is a big investment.
2. Don’t mix business expenses with Personal expenses.
We all have been there, we think that if we buy that one Guitar and start learning to play it, it will help with our productivity or get that coffee machine we will reach on time every day, but unless you work in a coffee shop or music store, all these are not office purchases they are personal expenses.
The entire purpose of a Card is to ensure adequate cash flow for your business. depending on the type of business, this cash flow will look different for different business owners, but the bottom line is the same business expenses and personal expenses should be kept different at all costs.
If you want to keep track of your business expanse you can also use an accounting automation software like ProfitBooks.
3. Have a credit card policy.
You must have seen those fire emergency buttons inside a glass box with clear instructions “In case of fire break the glass.” A card should be like that button. There should be proper restrictions on the card and the credit card user too. Even if your card is a common card in the office there should be a proper system for it. The person with the card should be the responsible person who sticks to the budget and is aware of the credit card systems you have in place.
It’s also very important to send a card using Limited. E.g.- Aim to keep your credit card usage lower the 30% as it’s considered a healthy ratio.
This also depends on the card type as well as the type of business. For e.g- card usage in an event management company will be different than the card usage in a brick-and-mortar business.
Make sure no matter the business type that the availability of funds is not miss used.
4. Keep track!
You can’t account for, what you cant track. sometimes it feels like a card payment is not actual money, that illusion can lead to insufficient funds at the end of the month.
Remember that using a credit card is like taking small loans, and one thing we know about loans, hence it’s very crucial to keep track of all your transactions and keep all the card receipts. This will help you track your expenses and use your card with caution.
You can keep track manually or use accounting software like ProfitBooks. to keep track of your expenses.
5. Make your credit card payments on time.
As we have mentioned above, making timely card payments is very important, this maintains your credit score which helps you with loans and other rewards programs
Set proper reminders to make this payment, maybe on Google Calendars or even ask your mother to remind you. ( they remember everything).
If you miss a payment, some systems insures that you don’t pay extra credit charges for the missed payment.
Different Banks have different policies, please make use you understand the policies of the card before investing in one.
6. Take the advantages and benefits.
This is the fancy part we see in movies and TV shows the benefits! A lot of different cards give you a variety of benefits. The travel concessions, the discounts on office supplies, and even concessions on office dinner parties!
An American Express can and will provide you with these benefits and of course, use them.
A hidden benefit of a good card is that you get access to some clubs and networking events as well, this will help you in marketing as well.
7. Regular review.
Once you get the card, make sure to regularly review your expenses from your card. make sure you are using a card in an optimized way. The only way to understand that is by taking a regular review of all the usage you get from the card.
If the benefits are not justifying the cost, it’s always recommended to change your card plan or the card company to suit your business needs.
A business credit card is a big investment for any small business owner, the most basic issue with a card is nothing but keeping track of the expenses and monitoring its utility.
You can use a traditional method of Excel sheets to keep track or use accounting software like Profitbooks to do so.
ProfitBooks not only provide expense tracking but also allow its users to create invoices and inventory management. A complete accounting solution intended! and with our “forever free” plan, your accounting solution cost less than your morning coffee.
So, visit our website and sign in today!
Can I apply for a business credit card if I’m a sole proprietor or a freelancer?
Yes, you can apply for a business credit card even if you’re a sole proprietor or a freelancer. Many credit card issuers offer business credit cards for individuals who operate as independent contractors or have small businesses. You can use your Social Security number as the Tax Identification Number (TIN) on the application.
What are the advantages of using a business credit card instead of a personal credit card for business expenses?
Using a business credit card offers several advantages. It helps separate your personal and business expenses, making it easier to track and manage your business finances. It allows you to build a credit history for your business, which can be beneficial for future financing needs. Additionally, business credit cards often provide rewards and benefits tailored to business spendings, such as cashback on office supplies or travel rewards.
Can I get additional cards for my employees?
Yes, many business cards allow you to request additional cards for your employees. This enables you to track and manage their spending while providing them with a convenient payment method for business-related expenses. You can typically set spending limits on each employee’s card and monitor their transactions separately.
How does a business credit card affect my credit score?
While a business credit card is linked to your business, your credit may still be considered during the application process. The credit card issuer may review your personal credit history and use it to determine your creditworthiness. Additionally, if you guarantee the business credit card or if it appears on your credit report, your payment history and credit utilization can impact your credit score.
Are business credit card expenses tax-deductible?
Generally, business card expenses that are directly related to your business are tax-deductible. However, it’s essential to consult with a tax professional or accountant to understand the specific tax laws and regulations in your jurisdiction. They can guide you on which expenses are eligible for deductions and help ensure you maintain accurate records for tax purposes.
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