Despite the common misconception that they are interchangeable, a corporate credit card and a company credit card are two different products with different applications.
While corporate credit cards can be held by an owner and any number of employees, they are typically awarded to larger, more established businesses. Small business owners typically possess business credit cards. Both can be helpful in managing business expenses and obtaining funding.
ESSENTIALS
Owners of businesses, particularly small business owners, typically own business credit cards in order to pay for expenses and establish their credit history.
Corporate credit cards can be given to both owners and staff and are typically offered to larger, more established businesses.
Both kinds of cards can facilitate simpler tracking of business spending and aid in keeping personal and business expenses apart.Certain awards or bonuses, such as travel benefits, may be available with either type of card.
An Overview of Business vs. Corporate Credit Cards
Corporate credit cards and business credit cards have various characteristics, eligibility requirements, goals, and benefits, despite the fact that they are both potentially helpful methods of managing business spending and obtaining cash. It’s crucial to take into account various aspects while deciding which kind of card to get, including revenue, staff count, and business needs.
Credit Cards for Businesses
Similar to a personal credit card, a company credit card provides an adaptable and convenient means of making payments. To keep their business costs apart from their personal expenses, many small business owners opt to obtain a business credit card.
A business owner may decide to apply for a business credit card for a variety of other reasons. It helps track business spending and creates a credit history and profile for the company. It can assist in paying payments without the requirement for quick cash on hand and gives a revolving line of credit for unforeseen costs or big purchases.
The lending institution will determine whether businesses are eligible for business credit cards and if this depends on the business’s or the owner’s personal credit history. Many banks provide secured business credit cards to help develop or repair business credit for customers with no credit history or a terrible credit history; these cards typically feature higher interest rates, extra fees, and a security deposit requirement.
Rewards programs (such cash-back incentives), sign-up bonuses, reduced initial interest rates, tools for managing expenses, and variable payback terms that account for erratic cash flow are some advantages of business credit cards. Some might also include benefits related to travel, such hotel discounts or access to airport lounges.
A small business owner who knows they will be able to pay off a monthly charge (such a software license) over time may utilize a business credit card to make the purchase. This would be a smart method to pay for a recurrent expense and establish the company’s credit history.
Credit Cards for Businesses
In order to enable their employees to expense purchases to the company instead of using their personal cards or cash, many organizations provide corporate credit cards, often referred to as commercial credit cards, to their staff.
Companies having at least fifteen cardholders, a minimum yearly income of $4 million, and anticipated charges of at least $250,000 are often eligible for corporate credit cards. A strong credit score, sound financial standing, and registration as either a C company (C corp) or a S corporation (S corp) are additional requirements for eligibility.
Corporate credit card issuers typically request recent audited financial statements, documentation of the business structure, tax returns, contact details for an employee with company authorization to transact business, and other business-related information.
Benefits of corporate credit cards can include easier management and control of corporate expenses, providing records for tax purposes, decreased financial administration around employee spending and reimbursement, automatic or electronic expense reporting, and travel rewards such as frequent flyer points, hotel perks, emergency assistance services, and other perks.
A corporate and a business credit card differ primarily in the size of the company to whom they are issued and the use of the card inside the organization. Small business owners are more likely to open business credit cards than owners of huge corporations with numerous employees.
Employees who travel frequently for work may be eligible for a corporate credit card from a large corporation. This would eliminate the need for employees to be reimbursed for major expenses like airfare, lodging, and vehicle rentals, and make it simpler to track and manage travel-related spending.
A company’s registration and organizational structure as a C or S corporation determines its eligibility for a corporate credit card.
Selecting the Appropriate Card for Your Company
A business’s size, both in terms of income and workforce, its corporate structure, the intended uses of the card, and its anticipated spending limit should all be taken into account when choosing between a business and a corporate credit card.
In order to ensure that your application is accepted and that you have the financial means to make the required interest payments and repayments of the credit card, you must also carefully check the terms of the card and your company’s eligibility. Business credit cards, on the other hand, could offer more flexible payment terms in anticipation of erratic cash flow, whereas corporate credit cards typically require payback in full each month rather than allowing the bearer to carry a balance.
In terms of advantages and disadvantages, both kinds of cards might contain perks and rewards programs, though they usually vary in scope and details. They also frequently provide reporting or other tools to help manage business expenses. Corporate credit cards may have significant annual, service, and interchange costs; however, the fees associated with business credit cards will differ depending on the lender. Be aware that, in addition to interest, secured business credit cards frequently have annual, late, and returned check fees.
A Comparison of Corporate and Business Credit Cards
Typically, small company owners openTypically, large businesses with $4 million in annual revenue and minimum $250,000 in charges open these.
builds the credit history and profile of an organizationExclusively accessible to S corporations and C corporations (C corps)
Perhaps more accommodating terms of payment in case of erratic cash frequently demand whole repayment each month Each lender will charge different fees. It may have expensive interchange, yearly, and service fees.
What distinguishes a corporate credit card from a business credit card?
The size of the business for which a business credit card is intended is the primary distinction between business and corporate credit cards. Small business owners typically use the former, whereas large enterprises with more than 15 employees typically receive the latter.
Which Credit Card Should I Get—a Corporate Credit Card or a Business Credit Card?
It all depends on how you want to use the credit card and which ones your company is approved for. Due to their minimum revenue restrictions and corresponding employee counts, corporate credit cards are probably out of reach for a lot of small business owners. Compared to business credit cards, corporate credit cards have more features and benefits that larger organizations would probably want to take advantage of.
Do Corporate and Business Credit Cards Help to Establish Personal Credit?
It is improbable that having a business credit card as an employee will have an impact on your personal credit score. Nevertheless, if you own a company credit card—as the primary user or as an authorized employee—the card may affect your personal credit score.
The Final Word
It’s crucial to think about who will use the credit card and for what purposes when selecting a corporate or business credit card. While both types of cards offer potential benefits and spending flexibility, business credit cards are typically more suitable for sole proprietors. In contrast, corporate credit cards are more appropriate for larger C corps or S corps that wish to allow their employees to charge expenses to a corporate account.consider