Cryptocurrency And Other High
A number of card issuers have banned charges to buy cryptocurrency, yet a quick search online will give you more than a few results with options to put cryptocurrency on your credit card. But even if you can put cryptocurrency charges on your card, it doesnt mean you should. Youre trying to grow your business capital, so dont use a credit card as a source of cash.
I see a business credit card as something that should be used with great caution, says Downs. Its easy to get behind on payments.
Remember that investment can go down as well as up, plus you will owe transaction fees. That is a recipe for a pile of high-interest debt.
Pros/cons Of Putting All Spending On A Business Card
As TPG;pointed out several years ago, one reason why you might consider putting more than just business expenses on your business credit card is to prop up your personal credit score. Since many but not all business cards report only to the business credit bureaus, any spend you put on your business credit card will have no impact on your personal credit. This could help keep your utilization ratio low and your credit score high.
But business credit cards generally have fewer consumer protections and higher interest rates and fees. Indeed, many of the consumer protections included in the;Credit Card Act of 2009 dont apply to business credit cards. Issuers have voluntarily extended some protections, but a bill introduced in Congress in 2018 would have:
- Prevented issuers from raising interest rates on small businesses without proper notice
- Prohibited interest rate increases on existing balances
- Prohibited interest charges on debt paid on time
- Required any payment over the minimum apply to the balance with the highest interest rate.
Unfortunately, that bill never got a vote.
If you pay off your balance in full and on time every month, these proposed protections wont mean much to you, since they focus on cardholders who tend to carry a balance. That also means theres little risk in putting at least some of your personal spending on a business card.
Best Business Credit Cards For Startups
To get a business credit card for your LLC, first check your personal credit score to get a sense of which offers you may qualify for and then compare those offers to find the best deal. Most small business credit card issuers will judge your application based on your personal creditworthiness.
Keep in mind that if you arent the owner of the LLC, you must at least be an authorized officer of the LLC in other words, legally able to sign for the company in order to apply for a credit card in the LLCs name. Authorized officers will be named on the LLCs operating agreement, and can be the LLCs owner, president, managing member, member, or treasurer, for instance.
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Using Your Personal Credit Card For Business Expenses 5 Reasons To Reconsider
Although it may be more convenient to use your personal credit card for business expenses, you should be aware of the drawbacks of doing so.
Personal credit cards and business credit cards offer similar benefits, such as cashback rewards and travel rewards. Some credit card companies even offer 0% interest rate periods for both types of credit cards.
If you already have a credit card open in your name, its probably more convenient for you to put a business expense on it. Why go through the hassle of applying for a new credit card just for your business?
Although it may be easy to put business expenses on your personal card, you may be giving up certain perks that are unique to corporate credit cards. Plus, you may be missing out on some long-term benefits of using a business card instead.
Even if you dont own a business, you can get a business credit card for your side hustle. If youre interested in opening a credit card, visit an online marketplace like Credible to compare credit card interest rates and fees.
Here are five reasons you should consider using a business credit card for business expenses instead of your personal card:
The bottom line
How To Get A Business Credit Card
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How To Check If A Company Card Is Impacting Your Credit Score
If you’re unsure whether or not your company credit card affects your credit score, pull your credit report to see if it shows up.
“Now is a great time to do this since the credit reporting agencies are offering free weekly credit reports,” Roger Ma, a certified financial planner at lifelaidout® and author of“Work Your Money, Not Your Life,” tells CNBC Select. Normally, you are only able to get one free credit report per agency per year.
To spot whether or not your company card shows up on your personal credit report, Danielle Harrison, a certified financial planner in Columbia, Missouri, suggests looking to see if an inquiry was made for opening the card or if the card is listed as being in your name.
“If the answer is ‘no’ to these questions, then the corporate credit card will not impact your credit score,” Harrison says.
How Do Personal Credit Scores Differ From Business Credit Scores
The main differences between the two scores are:
- Personal credit scores are private, while business credit is public meaning anyone can look up your business score.
- Personal credit scores are connected to your social security number, while business credit scores are tied to your EIN .
- Personal credit scores range from 300 to 850, while business credit scores range between zero to 100.
Enjoy 24/7 access to your account via Chases . Sign in to activate a Chase card, view your free credit score, redeem Ultimate Rewards® and more.
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How Do I Check My Business Credit Score
Dun and Bradstreet offers a free service called CreditSignal, which gives you alerts when your scores or reports change but doesnt give you access to the full reports themselves. Heres what the fine print on the website says:
CreditSignal only indicates that your D and B scores and ratings have changed and alerts you when your business credit file has been purchased. To view actual scores and ratings and learn about what industries are purchasing your D and B file, we recommend that you upgrade to one of our business credit monitoring or credit building solutions.
Related:;The best no-annual-fee business credit cards
Business Credit Cards Arent Covered By The Same Rules As Personal Cards
The CARD Act of 2009 created some rules that credit card issuers had to follow, but it also carved out some major exceptions for business credit cards.;
For example, the CARD Act requires a minimum 21-day grace period to pay a bill before it is considered late. It also makes card issuers apply payments to the highest interest rate balances first and give customers a 45-day notice before raising rates on future charges.;
Yet small business credit cards are exempt from these requirements. Thankfully, many credit card issuers have chosen to voluntarily apply these rules to their small business cards.
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Information Youll Need To Provide
When filling out an application form for a business credit card, there are some extra pieces of information required in addition to what you might provide for a personal credit card application.This is likely to include:
The name of your businessIf youre the sole owner of your small business, you might not even have a designated name for it. If this is the case, dont worry, youre allowed to use your own name instead.
Contact informationSimilarly, if you dont have a separate business contact number and mailing address, you can also use your own here too.
A Taxpayer Identification NumberThere are two numbers you could use for this, depending on how your business is set up. If youre the sole business owner, you can use your Social Security number. Or, in the instance that you employ staff or have a more formal business structure, then you should use your businesss Employer Identification Number. You can easily get;an EIN on the IRS website.
Your industryIts up to you how you want to describe your business; you can either use more rigid categories like travel, food and drink, or retail, or you can describe the exact service you provide should your business type not fall into those categories.
How long youve been in businessThis ones pretty self-explanatory.
Revenue and expensesThis is the part where you enter how much money your business makes and how much your outgoings were to run your business.
Youll Pay More In The Long Term
Business credit cards usually have higher fees and higher interest rates. The trade off for these higher rates is that most of your business expenses and interest are tax deductible. Personal purchases, however, are not tax deductible, so you will have no return on those purchases. If you are making personal purchases using your business credit card, those purchases will cost you more in the long term. Not to mention, you will be taking valuable funds away from your business when you use business credit for personal needs.
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Personal Cards Make It Harder To Track Employee Expenses
If your business has employees and you give them spending privileges, most business credit cards offer free employee cards. The issuers make it easy to track spending per employee by assigning a different card number to each employee. You can also set spending limits and alerts if needed.
If you use a personal card for business expenses, you won’t be able to get employee cards. You can add them as an authorized user, but you can’t separate the transactions and you are personally responsible for all purchases, whether or not you authorized them.
A Business Credit Card Can Make Recordkeeping Easier
Whether youre applying for a loan or preparing to file your tax return, having well-organized records can save you time and money .
William McDevitt, a Certified Public Accountant with Wilkin and Guttenplan P.C. in New Jersey, says if you intermingle business and personal expenses you could have to manually go over the account at the end of the year and figure out which expenses are deductible. He also points out that if you are audited, you need to support the deductibility of those business expenses.
A business cards online portal or app might help. Some let you tag or label purchases, add a note to the purchase and attach a picture of your receipt that you can easily pull up later.
If you decide to use a personal credit card for your business, theres no difference from a tax perspective, according to McDevitt. But you may want to only use it for business expenses to avoid potential confusion or problems later.
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Business Credit Cards Have Different Bonus Categoriestargeted To Businesses
Rewards credit cards have bonus categories based on the customer they are targeting. Personal rewards credit cards often earn additional points for travel, dining or grocery purchases. Business rewards;credit cards target categories where businesses spend the most, such as office supplies, telephone and internet service and online advertising. Using a business credit card for your business expenses allows you to earn additional miles and points where you spend the most.
Can You Switch A Personal Credit Card To A Business Credit Card
Yes, depending on the card issuer, you can switch a personal credit card to a business credit card. Closing out a personal credit card could affect your credit score, so weigh your options if you want to close the account after switching to a business credit card. If you plan to transfer a balance, you may be limited because not all business credit cards offer balance transfers.
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Gives Your Business More Spending Power
Finally, if youre going to use your credit card to help finance your business costsand what is a credit card if not a short-term loan that gives your business a cash cushion, much like other financing options?a business credit card typically has a much higher spending limit than a personal credit card.;
Rather than opening up multiple personal credit card accounts and spreading your spending across them, settle on a single, easy-to-track business credit card account and rest easy knowing all your credit card spending is in one place.;
There are reasons that business owners use personal credit cards that go beyond convenience and points. Personal credit cards have consumer protections that dont extend to the business credit card world, thanks to the .;
Using the same personal credit card for business expenses that you do in your personal life, however, opens you up to more headaches and trouble than those protections are worth. You need to separate your expenses if you havent already, and give serious thought to a credit card built specifically for small businesses. The paperwork upfront will be worth it in the long run.;
Your Account May Be Closed
When youre approved for a business credit card, you agree to the terms and conditions that come along with using your account. According to Mike Pearson, founder of , Most business credit card issuers will make you sign an agreement where you agree not to use your business card for personal expenses. And, if you violate the terms of your agreement, then they have the leverage to cancel your card.
If your card issuer notices patterns in your expenses that are outside of your normal business expenses, that may send up a red flag. When you use your business credit card for personal spending, you are going against the contract terms for the card, which is grounds to close your account.
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Can I Pay Off My Personal Credit Card Through The Company I Work For
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Which Business Credit Card Is Right For You
Just like personal cards, each business credit card has its own unique characteristics and perks. When it comes to choosing the right card, find one that offers a bonus that will benefit your business and terms that suit your needs. Keep in mind that the more generous the perks are, the more likely a card will charge a substantial annual fee.;
Just like if you were getting an individual credit card, look at your needs as a business and find credit cards that fit, Grant said. You never want to sign up for a credit card and have that card shape the way you spend your money.
Some business credit cards like the Capital One Spark Cash for Business offer cash back on all purchases. Others may offer bonuses on travel and other business-specific expenses. An example of a card with these features is the Ink Business Preferred® Credit Card. Head over to see the full list of our favorite business credit cards for 2021.
Capital One Spark Cash for Business
Editors Score:
- Intro bonus:
- $0 intro for first year; $95 after that
- Regular APR:
- at our partners secure site.
Ink Business Preferred® Credit Card
Editors Score:
- Intro bonus:
- at our partners secure site.
American Express® Business Gold Card
Editors Score:
- Intro bonus:
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Makes It Harder To Track Business Expenses
When you use your personal credit card for business expenses, it can be difficult to track tax-deductible purchases. As you review your credit card statements, you might not remember what you bought on each and every purchase and whether the purchase was a business expense. Business transactions can also get lost among all of your personal expenses, which means that you could miss out on valuable tax deductions or forget to bill a client for reimbursement.
Additionally, if you have an employee entering transactions into your accounting software, they might view personal information on your credit card statement. That information may include your home address, credit score, credit limit and personal purchases.