Dedicated business credit cards offer many tools personal credit cards don’t have. They can save you money, help track expenses and simplify taxes.
In many ways, business cards function identically to personal credit cards, allowing users to make purchases including online and over the telephone, make withdrawals at ATMs and buy foreign currency.
However, business cards are issued to a business with an Australian Business Number (ABN), not to an individual, although a business with an ABN may in fact be operated by a sole trader or partnership rather than being incorporated.
Regardless of the business size, multiple cards on the one account can be provided to members of staff. Equally, a sole trader may need just one card.
Depending on your business structure, the card provider will require a specific liability arrangement:
Where cards are issued to the employees of a business, it is normal for each card to be assigned a fixed limit which will usually be much lower than the global account limit. E.g. total account limit $50,000, with cards issued to ten employees with limits of $5,000 each (or varying limits, but still with a total of $50,000).
It is also possible to limit the kind of expenditure permitted. E.g. a procurement officer may only be allowed to purchase business stock or equipment from certain suppliers, but not use the card for travel and entertainment.
Most business cards cards offer special financial tools to help with expense tracking, budgeting, accounting and taxation. Online access means that most transactions will be visible shortly after they are made. And each card’s monthly transactions are itemised in detail in the monthly statement, as well as being reported in total.
The ability to track transactions is a major advantage of a business credit card, replacing hours otherwise spent tracking down transactions. Data can usually be exported from your online card account into a spreadsheet or into accounting software such as MYOB and QuickBooks.
It is essential to understand the features available, and how to match them with the specific financial requirements of your business. This will enable you to find the card that is right for your circumstances. Make sure that you check the following:
Make sure your credit history is in order. To be successfully approved for a business credit card, you need to have a very good credit rating. Once a year you should request a report from a credit checking agency (such as Dun & Bradstreet) to make sure everything is in order and there are no mistakes on file. A healthy credit history means the bank will be more willing to provide a higher credit limit, a lower variable interest rate and better financial options.
For an individual or joint and several liability card, you need to be over 18 years of age, be a resident or citizen of Australia, have a good credit history and earn above a certain annual income threshold, which varies from card to card. You also need to provide your financial records and ABN number.