Small business credit cards vs. corporate credit cards: What’s best for your growing business?

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Whether you’re self-employed or own a business with hundreds of employees, having a dedicated credit card for your business can make a lot of sense.

For starters, having a business credit card makes it considerably easier to keep all your personal and business spending separate for tax purposes and bookkeeping. Not only that, but business credit cards can come with valuable protections and cardholder benefits, and business owners who use them can earn valuable rewards for each dollar they spend.

Still, it’s easy to get confused between small business credit cards and corporate credit cards, and it’s also easy to wonder if you should switch from one to the other at any given time. If you’re curious about the difference between small business cards and company credit cards (aka corporate credit cards), keep reading to learn which option might leave you better off.

What is a corporate credit card?

Generally speaking, corporate cards are designed for businesses with millions of dollars in annual revenue, which is probably why you have to apply through a bank or card issuer. Corporate cards are also geared to businesses with an already established credit history, and some corporate credit cards offer similar rewards schemes to small business credit cards.

With that being said, a company that issues corporate credit cards can choose to make their employees jointly liable for the charges. In that case, the card issuer would require each employee’s Social Security number before they can receive a corporate card.

Small business credit cards vs. corporate cards: What’s the difference?

With this in mind, you can easily spot the differences between company credit cards and small business credit cards. For one, you can easily compare and sign up for a small business credit card online, and that’s true whether you own a large business or are a sole proprietor.

Small business credit cards also give you the chance to build business credit if you haven’t already, and they’re designed for all types of small businesses, from small companies with a few employees to freelancers.

With a small business credit card, the owner of the business can also issue employee cards, which their workers can use to make business-related purchases. With an employee card, however, the employee is not liable for repayment of any purchases made.

How to decide between a corporate and business credit card

If you’re a larger company and you’re considering both corporate cards and small business cards, there are several details to keep in mind. Here are some of the issues you should consider as you decide:

Do you want employees to be jointly liable for purchases made with their cards? If you want employees to be jointly liable for any purchases they make with their card (including personal expenses they charge), then a corporate card is your best bet. If you just want your employees to have a way to charge purchases but don’t mind taking on all the liability, however, a small business card account may be just fine.

Do you want to earn traditional credit card rewards? Small business credit cards tend to offer better rewards programs than corporate cards, and you may even be able to earn the same type of rewards you earn on your regular spending. If you have a personal credit card that earns Chase Ultimate Rewards points, for example, you could sign up for a Chase business credit card that offers the same rewards and pool all your points in a single account.

What kind of cardholder perks are you hoping for? Perks offered by both types of cards vary but make sure to compare. If you’re hoping for a 0 percent APR offer or consumer protections like travel insurance, a small business credit card is probably a better bet.

Pros and cons of corporate credit cards

Corporate credit cards are geared toward large businesses with many employees, as well as those with revenue in the millions of dollars. With that being said, they do come with their share of advantages and disadvantages.

Pros:

  • Allows you to manage and monitor expenses for hundreds of employees
  • You may be able to earn cash back or rebates on spending
  • You can make your employees jointly liable for purchases they make

Cons:

  • Not as easy to apply for online
  • They tend to come with fewer protections on purchases
  • You need an established business credit history to be approved

Pros and cons of small business credit cards

Small business credit cards are less of a mystery since you can easily read about them and sign up for one online. Still, there are pros and cons that come with this option.

Pros:

  • Earn rewards on your spending and your employee spending
  • Easy to compare credit card options online
  • Pool rewards on personal and business cards in the same program
  • Easy to get approved without an extensive business credit history, which makes them a better option for startups

Cons:

  • Cannot make employees jointly liable for purchases made with employee cards
  • May not come with as many expense tracking tools as corporate cards

Making the switch: Moving from a small business card to a corporate card

If your business has grown to the point where you suddenly have hundreds of employees to manage, then you may want to consider a corporate credit card instead of the small business cards you have used in the past. It can make sense to do so if you want access to the detailed spending reports some corporate cards offer, or if you want to have employees be jointly liable for purchases they charge to their accounts, including personal expenses.

With that being said, corporate credit cards are generally best for businesses that rake in millions of dollars each year, as well as those with large numbers of employees who are making purchases on behalf of the business. Your business will also need an established credit history before you apply, which will be reviewed as part of your corporate credit card application.

The bottom line

Getting a credit card for your business is an important part of being a business owner, and that’s true whether you employ hundreds of people or only employ yourself. Just make sure you’re getting the right type of business credit card for your business and that you have access to the tools and resources you want the most.

Also, keep in mind that the best business credit cards should let you earn cash back or travel rewards, which can add up quickly if your business spends a lot on miscellaneous purchases or inventory each month.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."