3 Benefits of a Business Credit Card in Your Financial Strategy

When you know how to use business credit cards to your advantage and avoid the potential downsides, they can be a critical part of building a cohesive financial strategy for your business.

Here are three perks of using a business credit card as part of your overall financial strategy.

1 Credit card interest can be a business expense

The IRS defines business expenses as those that are ordinary and necessary. An ordinary expense is one that's common and accepted in your trade or industry. This could include a new water filter for employees in your office, even though it doesn't directly generate revenue. A necessary expense is one that's helpful and appropriate for the business, like a manufacturer paying for raw materials.

The interest you pay on debts—including credit cards—may qualify as a tax-deductible business expense, as long as the purchase you made with the card was for your business. This can include travel expenses, office supplies or monthly rent for a storage facility.

If you use a credit card for both business and personal purposes, you can only deduct the portion of the interest that's charged on your business purchases. Business credit cards often provide itemized year-end statements that make it easy to gather this type of information when it comes time to prepare your tax return.

2 Credit cards can reward your business

A business credit card can make buying goods and services fast and easy by rewarding you for your purchases. Some credit cards offer perks like price guarantees, extended warranties, fraud protection to protect your spending, and travel and emergency assistance.

Other types of credit cards deliver cash rewards and let you accrue points on business expenses like travel, utilities, phone bills and restaurants. Most rewards cards waive annual fees or don't have them at all, saving your business even more.

3 Credit cards can help your business grow faster

If you're just starting out with your business, a low-interest business credit card can help build your credit score as you acquire necessary goods. You can purchase equipment with a card that has no annual fee and low interest in case you need to carry a balance.

Just make sure to purchase items that are truly necessary for your business and that have a clear connection to helping you make money. And whatever you buy, make sure you can afford to pay for the purchase in a timely fashion before charging it or you'll get hit with late fees on top of interest, which can negatively impact your business credit score. Also remember to keep all receipts as proof of payment—and to check against monthly charges.

The bottom line

When handled responsibly, business credit cards can be powerful tools that deliver convenience, rewards and easier expense tracking. Use a credit card rewards earnings calculator to find the best card for your business.