Starting a small business is both a rewarding and challenging experience. For most small business owners, a significant source of stress (especially in the beginning) can be managing the monthly expenses while trying to make the business profitable. While relying too much on credit cards to cover monthly expenses can be dangerous, responsibly handling a small business credit card can also net a host of valuable benefits for your company.

Access Credit Faster

Unless you are one of the lucky business owners who have enough capital to fund your company for at least a year, you could definitely benefit from having access to a line of credit while you and your business are getting established in the market. While small business loans usually offer a lower interest rate, the application and approval process can be difficult and lengthy. Banks may be less inclined to offer you a loan until your business has built a strong credit history and a proven record of success (i.e. you’re making money).

On the other hand, applying and being approved for a business credit card is a relatively easy process.  Credit card companies typically use the owners’ personal credit score as a basis for setting up an account, so it’s okay if your business isn’t blowing up the competition just yet. And unlike a small business loan, you only pay interest when you use the card - use it for monthly purchase (and accrue reward points) or keep it for a rainy day.

Dispute Charges Like a Boss

Using your business credit card for routine business purchase can have a few benefits: earn points (if the card offers such) and have access to dispute resolution protection through the credit account. Suppose you order six cases of copy paper for the office and one case arrived with extensive water damage. If the vendor will not offer a refund, you can contact the credit card company and dispute the charge. Chase or AMEX may not replace your copy paper, but this action can force your vendor to take care of the issue. (Your next step would be the find a new vendor)

Bulk Up Your (Business) Credit History

When first formed, your business does not have a credit history. Just as with your personal credit reputation, it is also important that your business establish a positive credit history. Aside from someday being approved for a business loan, your company’s credit rating can also make or break you with future vendors and clients. One of the easiest ways to begin laying a good credit foundation for your business is through a small business credit card.

Aid Your Accounting Process

Having all/most of your business purchases on one credit card can streamline your monthly accounting process because the ready-made monthly statement from the credit card company outlines your business purchases. You/your bookkeeper may also be able to better identify business-related and tax-deductible purchases without the hassle of combing through a mountain of various check/cash/debit/ACH transactions. 

Earn Valuable Rewards

Last but not least, credit card rewards are available for business credit cards. Many large vendors, such as office supply stores, partner with credit card companies to offer price breaks and cash back to customers who shop with the vendor and use the credit card. It’s a win-win for those companies because they increase their business. And it’s a win for your small business as well since you benefit from the rewards points of the credit card AND the price break with the vendor.

Additionally, some credit card companies offer cash back, airline points, or other great incentives. If you are smart with your business credit card and pay off your balance each month, you can actually come out ahead by racking up reward and/or cash back points.

Note: Even with the streamlined process that comes with a business credit card, having a professional accounting service like 1-800-Accountants handle your books will give you back even more time and cut back on the stress you already have to handle.