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The Do's and Don'ts of Picking a Small Business Credit Card

Follow this guide to find the business card with the best rewards.

Like it or not, running a small business today requires a credit card, but finding the right one can be a major challenge.

There are so many options out there, making it hard to even know where to start sometimes. After all, the last thing most small business owners want to do is spend their precious time scouring through all the credit card offers. However, devoting a little time to picking out the right card for your needs can pay major dividends for your business.

Here are a few things you should know if you’re in the market for a small business credit card:

Do: Remember that your personal credit will likely get checked.

As with personal credit cards, the best rewards and terms go to those with the best credit. If you are planning to apply for a new small business credit card, make sure your credit is in good shape. Get your FICO score so you’ll know where you stand. Check your credit report to make sure it is free of errors, and if you do find errors, make sure you report them and get them fixed. Yes, it’s just another thing to add to your to-do list, but removing those errors can lift your score, which gets you better terms and ultimately saves you money.

Don’t: Pick a card just for the awesome sign-up bonus.

We all love sign-up bonuses. Seeing those 50,000 miles in your frequent flier account or that $150 cash back bonus in your bank account is exciting. It’s why rewards junkies play the game.

Running a small business isn’t a game, however, and when you’re getting started, every dollar – every penny, in fact – is a big deal. Before you apply for that small business rewards card to get those points, make sure that card comes with a reasonable APR and no annual fee, if possible.

It’s not just all about cost, though …

Do: Make sure the card fits your lifestyle and how your business runs.

Know thyself. If you don’t, you’ll never get the most out of a card, whether it’s a personal card or a business card.

Will you be working with foreign companies or traveling overseas? You better get a card with an EMV chip and no foreign transaction fees, and you should consider a miles card rather than a cash back card.

Will you be driving a lot? Consider a cash back card or a gas rewards card, if you have a particular station that you visit often.

Will you only use the card sparsely? Don’t sign up for a card with a high minimum spending threshold. One of the worst credit card mistakes that anyone can make is overspending just to get rewards. That’s a surefire recipe for trouble.

Do you spend more at one store than you do anywhere else? Consider getting an account with that store. For example, a Staples Business More Account can get you 5 percent back in on purchases.

Don’t: Overlook how these cards can help with record keeping.

One of the main reasons for getting a small business credit card is record keeping. Separating your personal and your business expenses makes things easier on you, especially at tax time – and many small business credit cards offer extra tools to help you.

For example, the Capital One Spark Miles Select for Business card offers quarterly and year-end summaries, along with no annual fee, no foreign transaction fee, 1.5 miles per dollar spent on all purchases and a 20,000-mile bonus when you spend $3,000 in the first three months. Also, American Express business credit cards come with a feature called ReceiptMatch with QuickBooks, which allows you to label your transactions with your personal QuickBooks categories and export that data directly to your company’s QuickBooks file.

Do: Decide whether you’re looking for a charge card or a credit card.

Are you confident that you’ll be able to pay your card balance off in full every single month? If you are, good for you. You might want to consider a charge card, which doesn’t allow you to revolve a balance, rather than a typical credit card, which does. They often come with better rewards than credit cards – the American Express Business Gold Rewards card offers triple points on one category of your choice – and no set spending limit. Just don’t be late; otherwise you could get stuck with a sizable late fee.

A credit card is a better choice for most small businesses, especially those in their formative stages. Revenue and costs simply aren’t as predictable for those businesses, and paying that balance off every month in full may just be too much of a commitment.

Still, it’s important to work toward that goal. After all, whether you’re a regular person or a small business owner, Job No. 1 for any credit cardholder is to pay your balance off as soon as you possibly can.

Otherwise, you’re just making things much harder on yourself, and that’s the last thing any small business owner needs. Their job is hard enough.