As well as giving you access to additional funds, signing up for a business credit card gives you a number of worthwhile corporate benefits. So which business credit card provider is right for you?
Differences between a business credit card and a personal one
Business credit cards and personal credit cards are entirely different products. Although they share similarities (where you’re assigned a credit limit for an agreed interest rate), business credit cards are evidently intended for business use only. This means that business credit cards will offer different features and benefits, as well as having different eligibility criteria.
What’s more, credit card providers will often stipulate that you cannot claim a welcome bonus if you’ve had a credit card from them before. However, if you’ve had a personal credit card and now you’re applying for a business one (or visa versa) then you usually can claim a welcome bonus. The cards are treated as different financial products, with very little relationship between each other.
Here are some of the other key differences between business and personal credit cards:
Eligibility
Business credit cards will require you to be a UK registered business, a stipulation that even sole traders are usually required to meet. As you’d expect, the application process is often slightly more rigorous for business credit cards, with stricter requirements and higher standards of creditworthiness.
Different credit lines
Business and personal credit lines are separate, although don’t be surprised if your personal credit history is checked when applying for a business credit card. Additionally, there tends to be a higher agreed credit limit for business credit cards (usually ranging from £1,000 to £10,000).
Preparation for taxes
Although you don’t exactly need a business credit card for an expense to be tax deductible, it certainly makes life a lot easier. Having to sift through personal bank statements to separate your allowable expenses from your personal ones is a gruelling process, and an unnecessary waste of your time.
Business credit cards not only make it easy for you (by keeping all your allowable expenses in one place), but crucially this extends to employees too. If you issue them a business credit card, you can track the company money they have spent, too. It’s also more accessible to download business credit card statements from across your organisation into specialised accounting software.
Features
The benefits and features of business credit cards will be tailored for business operations. For example, with the sole intention of helping smooth over cash flow issues, many issuers will afford you a certain amount of days free from interest (usually around 50 days).
Other benefits can include partnership promotional programmes, such as a discount on Amazon Business.
A shift in mindset
Those with lifestyle businesses, or who are recently self-employed, may struggle to separate their work from their life. One of the best ways to really step up your business as its own entity is to have complete division between personal and business finances.
This way things like unexpectedly large personal bills are not a reflection of a downturn in your business. What’s more, using a business credit card means you aren’t borrowing from your personal finances to pay for office equipment or the resources needed to grow your business.