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.
Why Mobile Payment Apps?
Hey, using a plastic credit card is so 1999, right?
Mobile payment apps have taken off in the few years since they’ve been introduced, with nearly 30% of Americans reporting they would like to pay for every transaction with their smartphones. They’re even more popular with young folks, with 86% of students on college campuses reporting they regularly use payment apps.
It’s easy to see why they’re so popular. We’re collectively addicted to our smartphones, so using them to pay is easy. Keeping track of purchases using these apps is a breeze, too. Your phone is much more secure than cash, and you are not earning any credit card rewards by using cash or debit cards.
Plus, there is a big reason we have not talked about yet. It’s pretty cool to tap your phone onto your local grocer’s PIN pad and see the transaction go through. How do they even do that, anyway? That’s some "Star Trek" stuff right there.
Let’s take a closer look at some of the most popular mobile payment apps you can start using today.
Apple Pay
Apple Pay is one of the more flexible payment apps on the market today. You can use it to purchase items at the store, online or through apps. You can also use it to send money to others through a simple iMessage.
Paying in store is a simple process that uses either facial ID or a fingerprint to ensure security. It’s faster than using a credit card, too. And Apple users can also use their Apple Watch to pay. You can also link your account to your Apple credit card, which comes with 3% cash back.
Fees are reasonable too, with there being just a 3% charge to send money to friends and family if it comes from your credit card. Other than that, the service is completely free for users.
One big downfall of Apple Pay is it is limited to iPhone users only. So, if you are using an Android phone, you are out of luck. You’ll be forced to use another service.
Google Pay
Google Pay offers many of the same features that Apple Pay does. You can use it to pay in stores that are equipped for it. It’ll easily allow you to purchase items online or through apps on your phone. And you can easily use it to send money to others.
Google Pay also comes equipped with the latest security features, so you can rest easy if you ever lose your phone.
Not surprisingly, Google Pay is geared more towards Android users. The big advantage of Google Pay versus Apple Pay is you can use it on any phone. Google Pay has an iOS app, but Apple Pay is limited to Apple devices.
One disadvantage Google Pay has compared to Apple Pay is that you cannot use a credit card to send money to someone else. You’ll have to link your account to your bank to use that feature.
PayPal
Gone are the days when PayPal was the weird way to pay for stuff you bought on eBay. It has become one of the world’s largest payment processors.
PayPal is a terrific app for sending and receiving money among friends. If you send cash from your PayPal balance to someone else in the U.S., you will not pay any fees. Transaction fees apply if you are sending money from your debit card or credit card, or if the payment is leaving the country.
The company’s fees for sending money overseas are very reasonable, which has made PayPal one of the go-to apps for that purpose. It’s especially convenient for businesses who have many employees in different nations around the world.
There are a few major disadvantages to the PayPal app, however. You cannot use it to purchase anything in store. Also, comparatively few online retailers allow you to pay with your PayPal balance. This means that you are likely stuck using your credit card through this app anyway, at least when buying stuff.
It would be nice for PayPal to make it easier to spend money in your PayPal account, without having to transfer it to a bank.
Venmo
Venmo is a little like PayPal because it focuses on sending cash primarily to other people, rather than using it to pay for items.
Here’s how it works. You have a Venmo account — which is then linked to your bank account and credit card. You use it to send and receive money to and from your friends, which Venmo makes incredibly easy. Money in your Venmo account can then be transferred to your bank account, albeit for a small ($0.25 per transaction) fee.
You can use Venmo as a payment method for many top websites and apps, but keep in mind you’ll be limited to the same number of merchants that accept PayPal.
Venmo and PayPal are so similar because Venmo’s parent company was purchased by PayPal a few years ago. I’d just stick with the PayPal app if you already have that.
Your Bank's Mobile Payment App
If you use one of the major banks — like Chase, Bank of America or Wells Fargo — chances are you can pay for many things through your bank’s app; even purchases at traditional retailers.
For instance, the Chase app allows you to easily use your banking info to pay for mobile orders on websites or apps. You can use it to pay in physical stores too, assuming the store is equipped for it. Other major bank apps have similar functionality.
You will be somewhat limited in merchants that accept your bank’s app payment method. There are hundreds of major retailers who have invested in the equipment needed to take mobile payments, but you will not have as much luck if you go to local mom and pop retailers.
Mobile Payment Apps: The Bottom Line
It’s easy to see why mobile payment apps are so popular; they are just so convenient.
If you’re still on the fence about which one to use, I would not make it too complicated. I’d stick with either Apple Pay or Google Pay, depending on what device you prefer. Each comes with good security, ease of use and are widely accepted.