Business Credit Card or Personal Credit Card: What’s the Difference?


With so much credit card advertising by financial institutions, business owners of small sole proprietorships or partnerships may wonder what’s the difference between making purchases with a business credit card instead of their own personal credit cards.

Although there’s nothing stopping someone from using their own personal credit card especially for small business purchases, there are some major advantages to having a credit card solely for business.

Staying Off the IRS’s Radar

Every year we go through the motions of filing our taxes with the Internal Revenue Service (IRS). In recent years, the IRS has started honing in on people who mix their business finances with their personal finances.

Mixing business and personal expenses can put business owners at a higher risk of being audited by the IRS and, face it, no one wants the IRS knocking at their door. Keeping expenses separate makes tax time much simpler and eliminates a lot of gray area.

Reaping the Rewards

Almost any kind of credit card for small businesses comes with some kind of special features, offers or rewards. Business owners just need to shop around to find the card that they can benefit from the most. Almost every business credit card will offer higher spending limits than a personal credit card which comes in handy as many business owners find they are making larger purchases than just an occasional ream of paper.

In addition, these cards will come with spending incentives. Some may offer deals and savings for frequent travel while others may offer significant savings or cash-back deals for the usual purchases like gas, office equipment or even cell phone plans. It’s just a matter of finding the card that fits the business’ needs.

Getting More Security and Protection

Standard credit cards usually come with some kind of identity theft protection or security features, but financial institutions really step up these programs for businesses.

They take business operations seriously and can offer great protections and plans like traveler’s and auto rental insurance for business owners that travel or added purchase monitoring services to prevent theft, suspicious purchases and/or control spending by other authorized card users like employees.

Furthermore, business owners usually get the benefits of administrative web-based software to review their spending trends and budgets.

Ditching the Small-Time Act

Everyone loves their local mom-and-pop shops, but there are definitely benefits to having a reputable business that operates like the big boys in the industry. Business owners are taken more seriously and given more respect when people get a glimpse of their business credit card.

Whether making a standard purchase at the store or paying for lunch at a business meeting, business operators that use business credit cards make their businesses look legitimate and well-established. Business cards also lessen, or in many cases eliminate, the need for cash and checks while also building good credit history for the business.

Good credit history allows for future growth and the willingness of financial institutions or other financial backers to further invest in the business.


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