Know What is a Business Credit Card & Its Benefits - Kotak Bank
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It's common for entrepreneurs to use their personal credit cards for their business expenses. However, this isn't the smartest or even the cheapest option. Once your business finds its footing, you can reap huge rewards by using a credit card exclusively for your business. This type of card is available against your current account or the account in which you do your business.

Benefits of Using A Business Credit Card For Company Expenses

1. It Increases Your Available Credit Options

If you want to take your business to the top, it's time to stop swiping your personal credit card for business expenses. The reason? You are limiting your credit options for personal expenses. Having separate cards will expand your credit limit.

2. It Helps Your Business to Build a Credible Credit History

Having a business credit card the best way to build a credit reputation for your business quickly and easily. Small firms and start-ups are often turned down when they try to avail of loans. A business credit card establishes the credit rating of your business and can open up future financial opportunities for your business.

3. Easier To Maintain Separate Tabs: H3

If your business is a corporation or a private limited company, then it's vital that you separate your business expenditures from your personal ones. When you mix these up, you end up losing the legal protection that you sought by making your business a corporate or a private limited company. Keeping your expenditure separate is also good for tax accounting. When you file your company’s taxes, only the expenses you made for your business are deductible.

4. Delegate Spending To Your Employees, Yet Keep Control on Them

As your business grows, you are bound to add employees and delegate responsibilities. It becomes important for you to allow them some amount of buying power for company-related expenses. By giving business credit cards for your employees, you can achieve this, while keeping a tab on their spending.

5. Gain Access to Other Financial Products

As a small business owner, you are always on the lookout for new ways to fuel the growth of your business. However, not many entrepreneurs are aware that they can make use of a business credit card to improve their businesses. Several credit card companies offer business credit card users the latest innovative business and tracking tools.

Best Practices for Using a Business Credit Card

Using business credit cards can be a convenient and efficient way to manage expenses and cash flow within a company. However, to maximize the business credit card benefits and avoid potential pitfalls, it's essential to follow some best practices.

  • Establish a clear and concise corporate credit card policy that outlines the eligibility and responsibilities of cardholders, spending limits, and consequences for policy violations. This policy should also define the expenses charged to the card.
  • Monitor employee spending habits regularly to ensure they are following the established policy. This helps to identify any potential fraudulent activity and encourages responsible spending.
  • Integrate corporate cards with accounting software to streamline expense management and provide accurate financial reporting. This can reduce administrative time and improve accuracy.
  • Separate personal and business expenses by using different credit cards or accounts. This simplifies the expense reporting process and makes it easier to track and manage costs.

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How to Choose the Best Business Credit Card

1. Understanding how it works

Before applying for a business credit card, it’s essential to understand, what is a business Credit Card? Business cards come in two types - charge cards and credit cards. While charge cards require full payment every month, credit cards allow carrying a balance with interest.

2. Reviewing your expenditures

Understanding your business's expenses is crucial in selecting the right credit card. Reviewing your books from the previous year can help identify the categories where you spend the most money. You can choose a card that offers rewards for the specific expenses your business incurs.

3. What are the added benefits

Business credit cards offer many benefits beyond rewards, such as special financing offers, purchase protection, luxury perks, and account management tools. Special financing offers can provide intro 0% APR periods for purchases, while purchase protection and insurance can safeguard your business's investments.

The Other Benefits Of Using A Business Credit Card Include:

  • Save time through the use of technology

Technology has made it possible to save time and effort using a business credit card instead of carrying large amounts of cash or a checkbook. With a credit card, purchases can be made quickly and conveniently, especially for online transactions. Additionally, in a cashless economy, a credit card is often the only accepted method of payment for certain goods and services, making it an essential tool for businesses to have.

  • Earn valuable rewards

Like personal credit cards, business cards also provide rewards and perks such as loyalty points and cashback on various transactions. For instance, if you hold a business credit card that offers travel points, you can accumulate points and redeem them for discounted or even free hotel stays and airline tickets, helping you save on your business travel expenses.

As you start using your business credit card, you will discover even more benefits than the one listed here. So what are you waiting for?

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.