You should know that business credit cards are highly convenient ways to make relevant purchases for your commercial purposes, including manufacturing materials, equipment, and office furniture, among other things.

Still, the main idea is understanding that business cards function differently than personal or consumer credit cards or loans. Rewards, eligibility, and liability protections vary based on the card you get, but individual consumer protections may extend for your business purposes. By checking here, you can learn everything about Federal Reserves.

The main idea is to understand that a business credit card is created explicitly for company owners. It does not matter whether you are a sole proprietor, operator, or company owner because you can take a business credit card based on your specific requirements. You do not need an office or employees for the process.

As the name suggests, the main idea of using them is for the company’s purposes, meaning you should handle business expenses such as travel, office furniture, and supplies. If you are a new business, we recommend you be careful about using them to spend the money you still need to earn.

This is especially important since most business cards feature specific terms and conditions and stipulations, meaning you cannot use them for personal expenses. When you get a business card, you should know it helps boost a business credit.

It is a different approach than personal or consumer, meaning you will boost credit to obtain a loan in the future. Specific cards will offer you short-term financing while repaying everything before the due is vital for preventing problems from affecting your company.

Who Can Qualify for a Business Credit Card?

Generally, business owners can take advantage of business cards, but you may present a personal credit score beforehand. At the same time, you will need to keep business and personal expenses separate, which is vital to remember. You only need a few employees or a storefront to qualify, but income is an indispensable eligibility factor.

Regarding qualifying business owners, we are talking about freelancers, sole proprietors, large and small business owners, limited liability companies, and corporations.

Things to Know Before Applying

1.   Business Credit is Different Than Personal

You probably understand that numerous US citizens feature credit histories and scores. Therefore, you can use a personal loan to sign up for a credit card, get small or large loans, and pay for utilities, ultimately affecting your credit score.

On the other hand, business owners feature commercial credit, allowing the issuer to determine whether an owner is responsible. Card issuers will consider both business and personal credit histories to decide whether you qualify for a credit card and the limit you will get for a revolving loan you wish to get.

Besides, providers will report credit card activities to business credit bureaus, which functions differently than consumer options. We recommend you visit this guide: https://www.kredittkortinfo.no/bedrift/ to learn more about getting a business credit card in Norway.

Sole proprietors or small business owners without credit history should take advantage of secured business cards, a much safer option allowing them to create a new score and boost their overall account.

2.   You Do Not Have to Incorporate or Register a Business

Suppose you own a partnership or are a freelancer or sole proprietor; you can qualify for a business credit card. At the same time, businesses do not need to be registered and incorporated so that you can benefit from an overall credit.

You will not need an EIN or Employer Identification Number, but we recommend registering beforehand for a high-end option. If you have an unregistered, unincorporated, or independent business, you will be personally liable for any debt you make on your business card.

3.   Liability Protection

The CARD Act of 2009 allowed consumer cardholders to get zero liability in case of fraud, which is an effective way to protect people from identity theft and other issues. Besides, consumers will get a 21-day grace period to pay back purchases and get notice about increasing interest rates.

Business cards do not feature similar liability protection. Therefore, a few options when getting business credit cards will allow you to get matching options. Still, it would be best to remember to read the terms before signing, preventing potential bad decisions.

Regarding protection, we can differentiate between commercial, joint, and several. Large corporations and businesses feature corporate cards, meaning they will get commercial liabilities. It means the business is liable for debts in case anything happens.

On the other hand, independent and small business owners may get several and joint liability, meaning both cardholders and businesses are liable for the issues. It implies the cardholder will get personally affected by a significant debt, meaning a consumer’s credit score will plummet. The same thing works for commercial credit scores.

That is why you should pay bills on time and avoid transferring balances from one month to another. As a result, you will prevent being responsible for debts and letting your consumer score plummet.

4.   Rewards Depend on Commercial Expenses

Similarly, as personal options, some business cards offer rewards to businesses, including welcome bonuses, travel rewards, and cash-back, among other things. At the same time, you may get short-term financing for significant purchases, which is a perfect solution for new businesses trying to kick off the ground.

When you determine which credit card is the best for your needs, we recommend you check out their rewards. For instance, low introductory annual percentage rates are a perfect feature to help you boost a business’s credit and avoid entering severe debt.

You can redeem cash back and reward points for business travels, employee gift cards, and office supplies. Return protection and extended warranties are adequate when buying new furniture and equipment. Any time you make a purchase using a reward card, you may be unable to deduct a tax as a business expense. Therefore, you should talk with a professional.

Final Word

Having a business card features specific similarities to owning a regular one for your personal needs and requirements. However, the crucial difference is that business ones are perfect for commercial purposes, meaning you can boost your overall credit while keeping overhead low and earning rewards.