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Why do I need a Business Visa Credit Card?

So you’ve finally started your own business that you’ve dreamed about for a long time. It isn’t totally necessary to have a credit card for your business, but it can help you out in specific situations. Perhaps the main thing that a business Visa credit card can do is help you out when cash flow is at a lull. And if your business is too small to have its own accounting department, or even bookkeeper, many business Visa Credit Cards come with software that makes it easy to track expenses and keep records for tax purposes.

There are however some things to be aware of. First, for the first few years you have your small business Visa credit card, your personal finances will be conflated with your business’s finances because your business Visa credit card has the same personal liability as a personal card. Therefore, if your business defaults on payments the creditor can come after you, since you are the one who signed for the card.

However, after a few years of regular payments on your business Visa credit card, your lender may be amenable to canceling the personal liability. This isn’t a given, but it is decided by lenders on a case by case basis.

One of the most useful things about having a business Visa credit card is that it can help you through those times when cash flow is tight while you’re waiting for invoices to be paid. If you pay off the amount within the card’s grace period, you essentially have a short term, interest free loan. Another great way that having a business Visa credit card helps you is as a way to track and keep on top of employee expenses. Every month you’ll have a complete record on what the card was used for and where it was used.

You’ll find that business Visa Credit Cards are like personal Credit Cards in many ways, in that many of them have rewards programs, “points” programs, and frequent flier mile programs. Unless you’re willing to strictly manage spending so that the balances are paid off every month, your best bet is almost always to choose the credit card that offers the best interest rate overall. Many cards will offer low “teaser” rates for the first few months, but it’s the “real” interest rate that you should pay most attention to.

Having a credit card for your small business can be a good way to keep capital freed up in your business. The business’s cash stash doesn’t need to be available immediately to pay off expenses because a credit card can be used for that purpose.

About the Author

Peter Carville is a freelance article writer who writes for Financial Facts about the current financial news and the credit crunch.

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