Many small and medium-sized business owners use credit cards in the course of their business. The problem is that many make the mistake of using their business cards. There are a couple of major problems with this:

First, if you use your personal credit cards for your business, you are blurring the line between business and personal finance. The better you can achieve the separation between your business finances and personal finances, the better off you will be. For this reason, a credit card in your business name is the best route.

Second, using your personal cards for your business puts your personal credit at risk. If the debt belongs to the company, shouldn’t it be on the company’s credit?

Most people don’t think this is a big problem until they run into trouble and no longer have their personal credit to lean on.

In one example, a couple in business accumulated more than $ 100,000 of unsecured debt on their personal credit for their business. When the company’s income fell, although the company was initially able to stay afloat, the couple were forced to file for bankruptcy.

With their personal credit destroyed, they could no longer obtain credit to support the business, and as a result, the business ran into serious trouble. The stress took its toll and the couple is now divorced. Perhaps things would have been different if they had relied on business credit rather than personal credit.

Perhaps you are thinking that your business will have no problems or that you don’t use credit cards much anyway. So what is the point?

Using a business credit card in your business offers some real benefits in addition to the two already mentioned. For instance:

1. Streamline operations and automate expense tracking. Paying expenses can be much easier to manage with a business card, and reports can be generated monthly or annually in many cases to help categorize and analyze expenses.

2. Business cards have “rewards” programs, too! If you have a lot of regular monthly expenses for your business that can be paid for with a rewards card, you could easily get $ 500 to $ 1000 per year (or more) in cash rewards, or even free airline tickets if you use a rewards card. trip. rewards card.

3. Manage employee expenses. Business credit cards can be configured to have spending limits for employees, which can help manage employee spending in the field.

4. Using a business card helps you build credit for your BUSINESS, which is of the utmost importance in today’s economy.

As you can see, there are several important advantages to using a real business credit card for your business.

A helpful tip for those looking to establish business credit: Try to get approved based on your business creditworthiness rather than your personal creditworthiness.

This means avoiding providing your social security number on credit applications for your business credit card. If you are not approved based solely on your business credit, you can try to apply and include your personal credit information as needed.