What’s best for your growing business?

important point

• Small business cards are typically designed to meet the needs of small businesses, while corporate credit cards are better suited to the needs of businesses with multi-million dollar annual revenues.

• Small business credit cards typically create personal liability for payments, while corporate cards typically do not.

• Employees can be jointly and severally liable for purchases made on corporate credit cards, but this is not the case with small business credit cards

Whether you’re a freelancer or run a business with hundreds of employees, having a business-only credit card makes a lot of sense.

Having a dedicated business credit card makes it much easier to keep all your personal and business expenses separate for tax and book purposes. It can also offer valuable protection and cardholder benefits such as cashback and points.

However, not all credit cards are created equal, and there are significant differences in liability burden, eligibility, and benefits between small business credit cards and business credit cards. Read this article to understand the best options for your business.

What is the difference between a corporate credit card and a corporate credit card?

Most of the difference between small business credit cards and business credit cards stems from one key difference: liability. For small business credit cards, the liability usually rests with the business owner. Business owners are personally responsible for paying the debt they acquire on their business credit card, and that credit is affected (for better or worse) by account activity. In the case of corporate cards, liability for liabilities is usually the company itself. This means that the business owner is usually not personally responsible for the debt.

This fundamental difference is why business credit cards have stricter approval requirements than small business credit cards. Let’s dig into some of these differences.

story continues

small business credit card

Business credit cards are designed for small business owners, but they generally function like traditional credit cards for consumers. Business credit cards are available to businesses of all types and sizes, from side businesses to multi-million dollar businesses. To be approved for a small business credit card, you typically need:

• At least a “fair” personal credit score (but higher is always better)

• Your business tax identification number (EIN) or personal social security number

Small business credit cards are generally easier to qualify than corporate credit cards. Still, this option has pros and cons.

Strong Points

• Get rewarded for your spending and your employees’ spending

• Easily compare credit card options online

• Pool rewards on personal and business cards in the same program

• Easily approved without extensive business credit history, making it a better option for startups

Cons

• Business owners are typically personally responsible for business liabilities acquired with the card

• Employees cannot be held jointly and severally liable for purchases made with employee cards

• May not come with as many expense tracking tools as corporate cards

corporate credit card

Corporate credit cards are designed for large, established businesses. To be approved for a corporate credit card, you typically need:

• Millions of dollars in annual revenue

• Established business credit history

• Legal entity status (C-Corp, S-Corp, or some LLC)

No matter what it sounds like for your business, know that corporate cards have their pros and cons.

Strong Points

• Allowing you to manage and monitor expenses for hundreds of employees

• You may earn cashback

• You can hold employees jointly and severally liable for their own purchases

Cons

• Applying online has never been so easy

• There is a tendency for less compensation at the time of purchase

• Must have an established business credit history to be approved

Key differences between business cards and corporate cards

Deciding between a corporate credit card and a business credit card

Here are some of the issues to consider when deciding between a corporate card and a small business card.

• Do you want your employees to be jointly and severally liable for purchases made with their cards? If you want your employees to be jointly and severally liable for purchases made with their cards (including personal expenses), a corporate card is your best bet. However, if you just want to provide a way to charge your employees for their purchases and don’t mind taking all the responsibility, a small business account on his card might be good enough.

• Want to earn traditional credit card benefits? Small business credit cards tend to offer better rewards programs than corporate cards, and you may even get the same types of rewards you get with regular spending. For example, if he has a personal credit card that earns Chase Ultimate Rewards points, he can sign up for a Chase business credit card that offers the same benefits and pool all his points into one account. increase.

• What cardmember benefits can you expect? Both types of cards offer different benefits. If you want a 0% initial annual interest business card and consumer protection such as travel insurance, a small business credit card is a better option.

Switching: Moving from a Small Business Card to a Corporate Card

If your business grows and you suddenly find yourself managing hundreds of employees, consider a corporate credit card instead of the small business card you’ve been using. This makes sense if you want access to detailed spending reports that some corporate cards provide, or if you want your employees to be jointly and severally liable for the purchases you charge to their accounts.

That said, corporate credit cards are generally best suited for businesses that make millions of dollars each year or have a large number of employees making purchases on their behalf. You will also need an established credit history before applying. This will be reviewed as part of the corporate credit card application.

Conclusion

Getting a credit card for your business is an important part of being a business owner, whether you employ hundreds of employees or just yourself. Make sure you’re getting the right type of business her credit card for your business and that you have access to the tools and resources you need most.

Also, remember that with the best business credit cards, you should be able to earn cash back and travel rewards. If your business spends a lot of money each month on various purchases and inventory, they can add up quickly.