Major business expenses in Canada are handled through business credit cards that are granted to company executives to spend specifically on the business. This enables a distinction between personal and corporate use.
Though, it is not necessary to have a business credit card, it does help out a great deal, because personal expenses should never be mixed with business expenses and vice versa. On the other hand, business credit cards help you most when you need to spend on items for the business, or when you need to invest in a particular venture. When you use Canadian business credit cards, you can avail a number of free offers such as airline tickets and the very popular cash back bonuses.
Having said this, it’s not a very easy task to get a business credit card in Canada, especially if you just have established a small organization. One difficult factor here is that initially if you apply for a business credit card, the bills would have to be paid from your personal credit card, until your business is strong enough to handle the business card payments. This means that until the business card is not reported or filed with a major business credit database, credit card companies will bill the business credit on to your personal credit.
Business credit cards are good enough mostly for executives who have a good personal credit record, because that personal credit will be supporting the business credit for critical times. Whatever financial crisis that the business goes through, your personal credit should be good enough to drive the business through the crisis. Now if you don’t have a good personal credit, you could get in a serious crisis, where you would lose business as well as a good credit score.
Secondly, if somehow your business suffers from debt, then that will reflect on your personal card, and you would eventually have a high amount of debt written on your personal credit card report. This situation can make you bad credit debtor and would be a hassle in the way of getting good loans in the future.
While the business credit card is meant to be used for the organization, it is signed by one single person who will be held liable for any issues with the card. In case the business credit card suffers, the person who signed the application will have to pay back the liability. If you do face such a situation, then the help of an attorney would be immediately required.
People using personal credit cards in Canada have the flexibility of getting help from the company when they give a “claim” for any defective product bought under the card. However, when business credit cards are put in use, then the credit company does not come in for any claims made. The reason behind this distinction is that a business credit card is a tool of an entire organization rather than of a person.
Though, the thought of getting good cash rewards might be enticing, think carefully. And if you happen to be a small organization, think ten times before you finalize on getting business credit cards.
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