How to Know It’s Time To Switch to a Corporate Credit Card

Aug 13, 2018

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Your business is humming along profitably. It’s growing and you’re adding employees. Your business card has suited you well so far, but you’re quickly becoming something bigger than a small business. Is it time to switch to a corporate credit card?

There are sound reasons to say yes.

One big rationale to switch to a corporate credit card is to rid yourself of the personal liability to repay that your issuer required of you when you first applied for your business credit card. Your corporate card can be set up such that your company is responsible for repaying the debt, not you personally.

You also could opt for a corporate card that creates shared responsibility between the company and employees who are cardholders. This will prevent the company from being liable for charges “that are personal in nature and which do not benefit the client for legitimate business purposes,” according to American Express.

Be Prepared to Share Financial Data

Not all business owners can qualify for a corporate credit card. Issuers set minimum revenue benchmarks and require that you have established a business credit score. American Express, for example, says your company must have grossed more than $4 million the previous fiscal year; have a business address outside the home; and have been in business for at least 12 months to qualify. You also may not be classified as a sole proprietorship.

You’ll also have to meet minimum spending requirements. For instance, Capital One says its commercial card program is designed for businesses with a minimum annual card spend of at least $1 million.

Of course, you’ll have to prove to the issuer that your company is big enough to qualify. Amex says to expect to be asked to provide the following:

  • Recent audited financial statements
  • Details on your company’s structure and organization
  • Tax information, including a federal tax ID
  • Contact information for your company’s authorizing officer

Other Reasons to Switch

If you’re happy with your Ink Business Preferred Credit Card, you don’t have to switch to a corporate card just because your business is growing. But Chase says you should start thinking about a corporate account if the number of employee cards you’ve distributed approaches 100.

Corporate accounts also come with more sophisticated expense management tools than you might otherwise find on small-business card accounts, including software that will allow you to integrate card spending with your general ledger to reduce manual data entry. And, much like with small business cards, you’ll be able to monitor and restrict individual employee spending based on the amount or category of spending.

Yes, There Are Still Rewards

Corporate cards still offer rewards and travel benefits, but you may find the programs aren’t quite as lucrative as you’ll find on small business cards. The One Card from Capital One offers tiered rewards: 1.5x on all spending if you choose a 14-day billing cycle or 1.25x points on all spending if you choose a 30-day billing cycle. That’s a slightly lower return than you’d get on either the Capital One Spark Cash for Business or the Capital One Spark Miles for Business cards. The information for the Capital One Spark Cash for Business and Capital One Spark Miles for Business has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

You may also have a higher annual fee for employee cards when you go corporate than you are charged with small-business cards. But you will have flexibility in how those rewards are distributed. American Express says you can consolidate earned points from multiple corporate cards for company redemption or allow employees to redeem them individually through the Membership Rewards program. Going the second route could serve as an employee incentive.

The Bottom Line

If you’re a business owner and your firm is big enough to qualify for a corporate credit card, it may be worth exploring, if for no other reason than you’ll be able to protect yourself better from liability. That can be a strong incentive. But you may also be looking for a more robust way to track your employees’ spending. When you have dozens or hundreds of employees, the tools business credit cards offer just may not be appropriate any longer.

Featured photo by FangXiaNuo/Getty Images

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