Which option is right for you? If you have a side hustle, run a freelance business or have a small business with revenue of less than 1 mill...

What are corporate credit cards and how do they work? #2


Which option is right for you?


If you have a side hustle, run a freelance business or have a small business with revenue of less than 1 million per year, you’ll probably want a business credit card. Business credit cards have a lot of advantages, including the ability to earn rewards on business expenses and build your business credit score.

If you have employees who need access to your business line of credit, you can make them authorized users on your business credit card. Business credit cards also require a personal guarantee, which means that you are personally liable for any charges made on the account (including authorized users’ charges). If your business does not bring in enough money to pay off your business credit card bill, expect to make payments out-of-pocket.

If your small business is legally classified as a corporation, has revenue in the millions and has multiple employees who need access to a corporate credit account, it might be time to consider a corporate credit card. Corporate cards do not require a personal guarantee, so it’s a good idea to make sure your business has built up a solid credit history before applying.

How do you qualify for a corporate credit card?

To find out whether your business will qualify for a corporate credit card, contact a corporate credit card issuer directly. Unlike consumer credit cards, corporate credit cards often include lengthy application processes — and you may be required to provide documentation proving that your business’s income and expenses are high enough to justify taking out a corporate line of credit. The application may even include a financial audit, so be prepared.

Can you get a corporate credit card with bad credit? Technically, yes. Since corporate credit cards don’t require a personal guarantee, a credit issuer probably won’t do a hard inquiry into your personal credit. This means that you could have a low personal credit score and still have your business qualify for a corporate credit card. On the other hand, if your business has bad credit or has only developed a limited credit history, you might have a harder time taking out a corporate line of credit.

Tips for managing a corporate credit card. Establish policies for all cardholders

When you open a corporate credit card, be ready to talk to your employees about your company’s new credit card policies, as well as how to use their company cards. Ensure that employees understand that they should only make business purchases on the card, as well as the importance of keeping up with payments and tracking receipts.

If you are an employee using a corporate credit card on behalf of your employer, the best way to manage your company card is to follow the guidelines set by your employer — and make sure to submit all receipts, expense reports and other necessary documentation promptly. If you have any questions about how your corporate credit card should be used, talk to your manager or reach out to a team member in accounting or finance.

Monitor and manage expenses

Managing funds for large corporations takes work. Luckily, most corporate credit cards come with high-level expense reporting tools that can make your work a little easier, whether you want to track expenses by category, monitor employee spending or reallocate your budget in real time. The best way to manage your corporate credit card is to take full advantage of these tools.

And if your business is large enough to have a corporate line of credit, it’s probably large enough to have an accountant (or accounting department) who can help you understand where your business’s money is going, whether you are staying within your budget and what you need to do to keep your corporate line of credit in good standing.