Your First Business Credit Card

As soon as you establish your own business, you'd be well advised to immediately begin working on helping your business build its own credit portfolio. How you've set up your organization will give you an idea of which way to proceed. Generally speaking, financing for a sole proprietorship is based on your personal credit. This means that a new business credit card will likely have your name on it, and the business will be added to your personal credit report.

If, however, you want to set up your business as its own entity, you'll have to do a little additional work. For example, if you incorporate, your business will be viewed as an independent entity with its own credit file and history. Any credit card issuers will report your company's account to business credit agencies such as Experian Business Services, Equifax Commercial, or Dun & Bradstreet instead of the personal credit reporting companies (Experian, Equifax and Trans Union).

In addition to legitimizing your business, getting a business credit card is will also "legitimize" you as a real businessperson, both in the eyes of the public and in your own mind. This never really happens when you habitually combine your personal and business finances. Furthermore, using a business credit card for your organization's expenses can not only improve cash flow, it can also make things easier when it comes time to balance the monthly books. Instead of sorting through numerous bills and receipts, you'll have all company purchases right there on the card's statement.

Having a credit card that's solely for business purposes will also help you more clearly see how much and where your operation is spending its money every month. When you have a mixed card, it may sometimes be difficult to determine spending for the business as opposed to your personal expenditures. A business-only card will provide you with a much easier view of just where your company's dollars are going.

When shopping for a business credit card, do so just as you would for a personal card. Compare the available offers, taking into account interest rates and fees as well as your company's financial picture and expected purchasing habits. Also keep in mind the possibility of rewards for the use of the card. Some cards will 'give you something back' with every charge that you make, such as airline miles, hotel-stay points, or even credit toward your balance. This is a great way to put all of your business spending to work for you, squeezing additional benefit out of things that you needed anyway.

If you find that the offers you're getting are for personal credit, simply get in touch with those companies and inquire about getting a business credit card instead. Once they realize the type of card you actually need, they'll typically send you an appropriate offer (or possibly sign you up on the spot, if you've contacted them by phone). Take advantage of it. Remember, a business credit card is not only something that can be of great advantage to your organization, it's also a way to let your business really stand up on its own credit feet.