Do you have a business credit card? If you operate an LLC, are a freelancer, or otherwise generate taxable income, you should consider applying for one. Business credit cards are a great tool for any business owner—they can help you bridge short-term funding gaps, earn rewards, and keep your personal and business finances separate. And that’s not all! Here are the top 9 benefits of business credit cards.

1. Earn cash back

Business credit cards often offer superior cash-back rewards, including generous sign-on bonuses. Some programs offer a set amount of money if you meet a certain spending threshold within the first 3 months or so. Others simply offer the rewards up front. Researching different programs will help you make the best choice for your company.

Depending on the lender and program, you may also earn cash back on your everyday purchases. Some companies offer cash back in certain categories, while others offer a percentage of cash back across the board.

2. Access a revolving line of credit

Your business credit card entitles you to a revolving line of credit. As with personal cards, once you pay down your balance, you can continue to make more purchases on credit. Plus, the interest-free grace period is usually longer than you’d get on a personal card.

As a general rule, business credit cards should be used for short-term financing. If you can’t pay the balance within 1 to 3 months, another source of funding may be more appropriate. Even with lower interest rates, business credit card interest is still usually higher than loans or lines of credit.

3. Higher spending limits

When you run a company, your business expenses are often much higher than your personal ones. It’s not unusual for some companies to charge tens of thousands of dollars per month. Thankfully, business credit cards have higher spending limits than personal credit cards.

Depending on your business size and revenue, you’re likely to have a much higher spending limit. Again, even with a higher credit limit, you’ll still want to limit purchases to what you know you can pay off in the short term. A $50,000 credit limit won’t help if you only bring in $25,000 in revenue per year. This business card benefit can be tempting, but smart financial management will help you avoid cash flow problems.

4. Keep your business and personal finances separate

As any good business owner knows, you should keep your business and personal finances separate. Not only will it make your bookkeeper or accountant happy, it also ensures you can more easily track and manage your spending.

It’s tempting to put business expenses on a personal card, especially when you’re first starting out. However, with the robust rewards and financial management tools available, getting a business credit card is a smart early decision.

On the other hand, you should not put your personal expenses on a business credit card—even if those rewards are much better than what you get with your personal card. 

5. Improve cash flow

Many companies have short-term funding gaps, even when they’re well-managed. Seasonal businesses, like construction or holiday-themed companies, often have slow periods or off-seasons. However, even year-round companies can experience cash flow problems. 

When you have a business card, you can easily charge everyday expenses to pay off when cash flow returns to normal. Ideally, you’d already have a large cash reserve on hand, but not every company can manage that in the early days.

Charging expenses makes it easier for you to use your current cash reserves, rather than applying for a loan or going without.

6. Gain control over employee spending

Most business credit cards allow you to add employees as authorized users, so they can have their own cards. This is great for two reasons. First, you will save time and hassle when tracking employee expenses. Instead of forcing them to submit receipts and reimbursement paperwork, your company can simply make a payment toward your card instead.

Second, your business credit card allows you to track employee spending in real time. Wondering whether Joe is within his daily meal spending limit? Need to keep an eye on how much those client lunches are really costing you? Your business credit card dashboard makes it easy to check. At the end of the billing cycle, you’ll receive a statement. Often, these statements will track spending categories and provide other financial insight.

7. Take advantage of rewards

As noted earlier, business credit cards typically have better reward structures than personal credit cards. They’re specifically geared toward what a business owner might find most useful. However, different cards offer different rewards. It’s worth taking the time to research multiple programs to find the one that will help you stretch your hard-earned money further.

Depending on your industry and business type, certain rewards will be more appealing than others. For example, if your company requires constant travel, look for a card that offers rewards for airline miles, gas, car rentals, hotels, and more.

Many business credit cards also offer additional perks, which are not related to how much you spend. For instance, some cardholders have access to airline lounges, while others offer automatic discounts on office supplies, rental cars, and other useful goods or services.

8. Build business credit

While business credit card applications take your personal credit history into account, having a card is a great way to start building business credit. Unlike personal credit scores, business credit scores range from 0 to 100.

As you make purchases and pay them off—ideally within the grace period—you’ll build credit for your company. The more reliable your purchases and repayment, the faster you’ll earn business credit.

Having good business credit is key when you’re applying for loans, business lines of credit, and other funding. Every lender or investor will want to know that your company is a safe and sure bet. A high credit score is just one more way to demonstrate that your business is a good risk.

9. Better purchase protection

If you’re using a business debit card, beware. You may not have adequate fraud protection—or at least not the level of protection that a business credit card can offer. If a scammer gets a hold of your banking information, your accounts could be drained before you even notice.

Business credit cards offer better purchase and fraud protection. If your cards are stolen, you can freeze them immediately. This ensures that no one has access to your funds. Your credit card company should have a written fraud protection policy—review each one to determine how and when you’ll be protected.

Start enjoying the benefits of a business credit card

Having a business credit card is a smart, easy way to help with short-term purchases, build credit, and earn big rewards. Plus, you’ll enjoy better fraud protection, gain business-oriented perks, more effectively manage your employee spending, and more.

Not every business credit card program suits every industry. Take the time to research and explore as many programs as possible. Whether you need travel perks, cash back, or hefty sign-on bonuses, there’s bound to be a credit card for you.

The benefits of business credit cards aren’t limited to the 9 listed above—but they’re certainly an excellent start.

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