Paying for Business Expenses Applying for a business credit card is something a small business should seriously consider for itself. Business credit cards can provide a range of benefits to a business. They allow a company to build up credit for better borrowing conditions down the road. They’re also quite easy to apply for. In this article, we’ll go over how to apply for a business credit card and other important points to note. What Is a Business Credit Card? A business credit card is a credit card that is intended for business expenses. These cards are not meant for any individual’s personal use, but they are available to businesses of all sizes. What Is a Business Credit Card Used For? Business credit cards are meant for business expenses, and as such, they come with several perks that you wouldn’t get with a normal credit card. Business credit cards typically have far higher credit limits than normal cards, but they are also harder to qualify for. [youmaylike] As a business phenomenon, business credit cards vary their offers greatly, and certain cards are meant for certain businesses. They are also highly customizable when it comes to individual payment terms. Businesses don't always have consistent incomes like individuals do, and business credit cards handle this problem. These cards are used to gain access to a long line of credit, to control employee spending on business expenses and more. One of their other common uses is to make accounting easier, as putting all business expenses on one separate account makes reporting to the Internal Revenue Service easier. In the end, there are many uses for a business credit card. Why Would I Need a Business Credit Card? You might not need one, but if you run a business, you’ll be leaving money on the table by not at least looking into them. Business credit cards can solve many of the problems business owners face. If you need employees to make purchases for the business, a business credit card is the safest option. These cards can be given to authorized users, a status you can easily give to any of your employees. From here, these cards make it easy to monitor employee spending and spot any discrepancies. You can attach customized user privileges to each card to limit spending and place limits on where the card can be used. As mentioned, if you feel like your credit is too limited, business credit cards are a sure way around low credit. According to the American Bankers Association, the average monthly payment on a business credit card is twice as high as the average payment on a normal one. If you’ve found yourself annoyed with the Internal Revenue Service over the complicated reporting processes for business owners, you’re not alone. This is where a business credit card can solve another problem. Simply handing over your business credit card statements to your accountant will make them love you. It will also provide them with the information they need to predict future spending. Another great use for a business credit card is lifting your liability for debts. Liability for credit card debt is determined by the liability offered by the card. If you’re using a personal credit card for business expenses, you are liable for all debts. On the other hand, if you use a business credit card with commercial liability, your business is liable for any debts, which changes the game. Keep in mind that some cards offer joint liability, which leaves both you and your business liable for any debts. Make sure you know what you’re getting into before signing any paperwork. Lastly, just as personal credit cards offer rewards programs, so do business cards. The main difference here is that business credit card rewards are tailored to your business needs. How to Apply for a Business Credit Card Before you apply for a business credit card, you should make sure you’re eligible. For the most part, you only require the following to be able to apply for one: A legal name for your business. A business structure to apply with, such as a Limited Liability Corporation. An explanation of the nature of your business. You’ll typically be given a list of industry types to choose from. A tax ID number issued by the Internal Revenue Service Your roll in the business you’re representing Various business/financial information including: Annual revenue. Number of employees. Length of time in business. Estimated monthly expenses. If you have this information ready, you can apply for a business credit card. At this point, it would be wise to shop around and find the best option for your business. Your decision on the business credit card you choose will have larger ramifications than your choice of a personal credit card. Applying for a business credit card is much the same as applying for a personal one. There are a few differences, but the main thing to remember is that business credit cards are taken more seriously than normal ones, so you’ll have to face a higher bar of entry. This doesn’t mean getting a business credit card is hard, but it does mean you need to arrive more well-prepared than you normally would. To make things easier, you can prepare for certain obstacles in advance. You may need to sign a personal guarantee that you will pay off any debts. Also keep in mind that if you’re the one applying for a business credit card, and your business doesn’t already have one, they will conduct a personal credit check. It may be best to try to optimize your personal credit if you plan on applying for a business credit card in the future. Some Options at a Glance Here are some of the most popular options for small business credit cards: Chase Inc Business Preferred This is a great option for a few reasons. With the Business Preferred card from Chase Inc, you get 80,000 ultimate reward points when you spend $5,000 with the card in the first three months. The card also provides generic, but highly useful benefits for business owners. Business Platinum Card from American Express The Business Platinum is ideal for businesses that spend a lot on flights and travel. This card offers numerous rewards on flight and hotel expenses and makes sure you get something serious back if you use it for these expenses. Chase Inc Business Unlimited The Chase Inc Business Unlimited offers unlimited 1.5% cash back. While we’ve said enough already, they also offer several other perks that are overshadowed by their first one.
How to Open a Bank Account Online
Online banking offers many of the same advantages and services as in-person banking. If you never need to speak with a teller in person or make a cash deposit, it may be wise to take advantage of an online bank's higher interest rates and lower fees. Don’t know how to go about this? Don’t worry. We will lead you through how to open a bank account online.
Online banks do not have branch locations that you can visit in person. You can still access customer service via chat, phone, or email. With online banking, you may be able to avoid overdraft fees and monthly account maintenance fees. Many banks charge a $10 maintenance fee each month plus $35 when a transaction causes a negative account balance.
Types of Online Banks
When choosing an online bank, you have a few options. Online credit unions are ideal for people who move frequently but want the advantages of being a member of a credit union. Credit unions may offer lower interest rates on student loans, free financial education, and be more lenient when issuing credit cards.
Credit unions must maintain a not-for-profit status, which minimizes fees and maximizes interest on account balances. Golden 1 Credit Union, Alliant, and Connexus are three online credit unions with excellent online reviews.
Neobanks, managed by financial tech companies, offer low monthly fees and the same high interest rates as some other online banks. They could work if you want an online bank, but be aware that you may not be able to get cashier's checks or make wire transfers with this type of pared-down bank account.
Online banks are for-profit institutions, but they often provide free checking account services and better interest rates on savings accounts. When choosing an online bank, look through their entire fee structure. Make sure they offer an account that meets your needs.
Pros and Cons of Online Banking
While online banking offers several perks, it is not for everyone. Before you go through the simple process of opening an online bank account, understand the pros and cons of this type of banking.
Online bank account pros:
- Choose from any bank in the U.S. that offers online banking
- Online banks may offer higher annual percentage yields (APY) on checking and savings accounts
- Online banks may have more advanced technology available to account holders than your local bank
- It's easy to find a fee-free checking account with many online banks
- No minimum account balance requirements
Online bank account cons:
- Can't deposit cash directly into your account, or you may have to pay a fee to do so via Green Dot
- Can't cash a check; deposit paper checks via the bank's app or website
- May have to open accounts at other banks if you want a certificate of deposit (CD) or money market fund
- Must have reliable internet access or a smartphone to access account information easily
Documentation Needed to Open an Online Bank Account
Federal laws dictate how online banks open new accounts. Each institution must verify your identity with a valid driver's license or government-issued identification. You may have to provide a photo of your ID along with your state-issued driver's license number.
All banks require your full Social Security number, Individual Taxpayer Identification Number (ITIN), alien identification card number, or a government-issued document proving your residence or nationality. You may also need to provide a photo of your unexpired passport, birth certificate, or consular ID, depending on whether you are a U.S. citizen.
Be prepared to offer your contact information, full legal name, date of birth, and proof of address. You may need to send a picture of a recent utility bill or another piece of mail showing your street address.
If you do not have a Social Security number, check out online account options at Chase, Bank of America, Marcus by Goldman Sachs, and Self-Help Federal Credit Union. These institutions accept ITINs as one form of proof of identity.
Is Online Banking Right for You?
If you are comfortable accessing your financial information via an app on your phone or through a website and do not currently visit your brick-and-mortar bank in person, online banking may be a good choice. People familiar with modern technology will find that they can easily do everything (except seeing a bank teller in person) with their online bank that they did with their local bank.
Unless you need to deposit cash into your account periodically or require in-person assistance from a teller, online banking could provide you with a technologically advanced and fee-free way to manage your day-to-day finances.