Running a small business is exciting. You’re out on your own, doing something you believe in, and managing the hectic day-to-day tasks that come with small business life. Cash flow is a big part of this process, and having enough capital is crucial to your business’s success. If you’ve got a good business credit card, like a Discover it® Business card, you may be wondering: Can you use it to cover daily expenses or even long-term costs? There are advantages if the situation calls for it.

How a Business Credit Card Can Be Beneficial

Used wisely, a business credit card can be a helpful small business tool. Here’s how:

  • It helps you keep business separate from personal. One of the challenges of running a small business can be keeping the accounting separate from your personal expenses. If you’re using a business credit card for your day-to-day business expenses, you’ve automatically got a way to track what you’re spending on your business, separate from your personal spending. Plus, any fees you incur on the card may be considered tax deductible.
  • The credit is there if you need it. While you should try to keep your balance at a level at which you’re comfortable, it can give you peace of mind to know that there’s money available should you need it — you can borrow up to your credit limit.
  • It’s easier to qualify. If you don’t have an extensive or strong credit history, you may not be able to qualify for a bank loan. But you may be able to procure a business credit card, which can help you build better credit over time.
  • It can free up cash. For short-term needs, using a business card enables you to use cash on hand to pay for other, more immediate expenses.
  • You can rack up rewards. If your business card has a rewards structure, you can earn points or miles or cash back simply by using the card for business purchases. If your company makes a lot of expenditures, getting a percentage of your outlay back in cash is a nice bonus.
  • The turnaround is quick. If you find yourself in a tough spot and you need instant financing, your credit card is always available. If you had to apply for a small business loan, you might find yourself in a time bind that could lose you a big opportunity.
  • You could pay low interest. If you’re using a business credit card at the start of your business life, you may be able to take advantage of a 0 percent interest introductory offer for 12 months or more. That will allow you to float a balance for a few months if necessary to get your business off the ground. That said, if you can’t confidently predict your ability to pay off the balance within the introductory period, or month to month in general, business cards carry an average interest rate of about 15 percent, which can get expensive.
  • You’ll build business credit. Just as a personal credit card helps you build personal credit, a business credit card can help you build business credit, which may put you in a better position to get a low-interest business loan if you ever need one. While your personal credit score ranges from 300-850, business credit scores typically range from zero to 100, according to NerdWallet

How to Use a Business Credit Card for Day-to-Day Expenses

Once you have a business credit card, you’ll want to use it responsibly. Here’s how:

  • Have a system in place. A business credit card is an excellent way to keep track of business expenses — if you have an established way to track them. If your business is just you, that’s not so hard; use the card’s export tools to download expenses to the tracking software of your choice. If you have employees using business credit cards, you’ll have to put more thought into how you want it all to come together.
  • Set rules and boundaries. Again, if you’re the only one using your card, this is a moot point. But make sure employees know what kind of expenses they can put on their cards and how much they can spend. Put your agreement in writing and have employees sign it to ensure that they understand how it will work.
  • Keep expenditures reasonable. Business credit cards work best for expenses that can be paid off within one billing cycle. For larger capital expenses, you may want to consider alternative funding.
  • Use it responsibly. Utilize your business card for business expenses only, to make things easier at tax time. Pay bills on time, keep your balance low (or pay your balance in full each month) and don’t go over any credit limits to build your credit score over time.

Used prudently, a business credit card can be a handy tool for your small business, allowing you to track business expenses, free up short term cash and build credit over time. For best results, make sure you establish a system for usage and pay off your balances quickly.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.