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Review Credit History
Credit card companies will review a small business owner’s personal credit history, business credit history or both. If the application asks for your employer identification number, and not your Social Security number, it’s a true business card. However, CardHub.com reports that most companies do look at your personal credit history, which many consider more important. Get a copy of your personal credit report from each of the major reporting agencies and a business credit report from a site such as Corporate Experian, and make sure each one contains accurate and up-to-date information. For a free copy from each agency, to which the law entitles you once each year, visit AnnualCreditReport.com.
Research Credit Card Companies
Wide availability and a range of options can make deciding which card to apply for very confusing. According to the SBA, for most business owners, the most beneficial card will have a high credit limit, a low annual percentage rate and a rewards program, and will allow you to build business credit while protecting your personal credit history. Instead of researching potential credit card companies one by one, visit sites such as
CardHub.com, Bankrate.com or CardRatings.com that allow you to make side-by-side comparisons. The SBA recommends choosing a company that shares payment data with a business credit-reporting agency such as Corporate Experian.
Issue Cards to Employees
An advantage to having a business credit card is the option to request as many cards as you need to distribute to your employees. However, in an article written for “Inside Indiana Business” Angela Morelok and Bryan Wright, a partner and senior manager, respectively, at BDK, a CPA and advisory firm, recommend limiting the number of cards you issue to only those employees who truly need one, setting low credit limits on each card and requiring employees to turn in itemized receipts for each credit purchase.
Establish Credit Rules
Create and distribute a written credit card usage policy to all employees. Include clearly defined policies and procedures for using a company-issued credit card. For example, define what an employee can and cannot purchase and specify whether credit card purchases require prior authorization. Define procedures for reviewing monthly charge account statements and individual purchases. Although many business owners complete this task, some delegate statement reviews to a trusted employee.