Canadian Labour and Business Centre
Canadian Labour and Business Centre Canadian Labour and Business Centre



How to Use Credit Cards to Maximize your Business Efficiency

Each year many Canadian consumers rely on the use of their credit cards when making a variety of purchases. However, if not used responsibly, credit card usage can quickly lead to huge debt. With all of the many warnings you can hear from time to time about the dangers of credit card use, there are also many benefits that factor in as well.

Managing your spending and only purchasing items you need and can afford can help you maintain wise credit card habits. If you are only able make minimum payments on your credit card, because you have been overspending, for example, it will not only take you a lot longer to pay off all of your debts, but your debt could continue to grow.

Alternatively, it is recommended that you pay off as much of your balance and ideally your total balance each month, so you are not being charge interest. By paying off your balance in full each time, you will be able to avoid the debt that can accumulate from using a credit card. Instead, you will be able to use your credit card as a tool that can help with your personal and professional expenses.

How to Use Credit Cards to Maximize Your Business Efficiency

If you are using a credit card for business purposes, it is a convenient option to help you manage your overall cash flow and other expenses. Not only is it an effective way to keep separate your personal and business-related expenses, but there are many rewards and benefits to using a credit card with these purposes in mind.

Why should business owners use a business credit card versus their personal credit card for company expenses?

    • To monitor spending

Many business credit card users have the benefit of using a card that comes with a tracking program that can help the employee as well as the company keep record of their spending. Being acutely aware of the amount that you are spending is a valuable strategy to ensure your are executing proper spending habits and the business does not suffer in other respects.

    • Fraud protection

You have a higher level of fraud protection with the use of credit cards for all business expenses as oppose to making purchases with cash and other means. Generally, card providers are able to help you in the event you even suspect you have been the victim of fraud or identity theft and resolve the issues which can otherwise lead to major stress and loss of funds.

    • Get insurance benefits with your annual fee

Many credit card options exists that offer insurance coverage for a variety of reasons. Some of the common features of many insurance programs include Vehicle Insurance, Medical-related coverage, as well as a variety of travel-related coverage, such as trip cancellation/interruption/baggage insurance and emergency travel support. Some credit card options include these insurance benefits as a part of the annual fee which means you do not have to pay extra for these benefits and will still receive adequate benefits and protective measures.

    • Rewards/Points programs

Credits cards with travel -related and other points programs are also a beneficial tool for business owners and employees. With most of these cards, when used to purchase flights and hotels, business travelers can earn points that can be used towards future bookings and reservations and other discounts. In addition, when the card is used to purchase merchandise, meals, and gas, points are also earned to be used on other rewards.

    • Income tax claims

One last benefit of using a credit card for business purposes is the ability to write of all of the expenses on your annual income tax form. Knowing exactly what expenses you can write off is of great importance, as this directly affects the amount of tax you will have to pay each year. This can also ensure your expenses do not outweigh your annual income.

Again, monitoring spending is key and making regular payments is necessary to avoid the potential risks which can affect the business’ overall profit - especially smaller business owners who rely on every bit of income perhaps even more.

Meeting with a financial advisor who focuses is on the business industry is a wise choice. These advisors can take you through the fine print of a business credit card and make sure you fully understand how to best utilize its features.

Business Credit Cards

In Canada, there are many business credit card options that are available depending on your company’s specific needs. For example, the American Express Business Gold Rewards is a preferred business card option. Business professionals can take advantage of the following features:

      • When you spend at least $3,000 within the first 3 months of use, you will receive a welcome bonus of 25,000 points that is equal to a round trip flight to many locations across North American.
      • Each year, you receive an additional 40,000 points as a ‘Thank You’ bonus.
      • For almost every dollar spent on the card, you earn 1 reward point.

Overall, you can use the points earned with this card to re-invest in your company, through everyday business-related purchases. Another way to use these points to your company’s advantage is to transfer them to other travel points loyalty plans, such as Aeroplan and receive further perks.

First and foremost, it is especially important to remember that using a credit card for business related purposes should still be performed with a certain level of caution and responsibility.

Learning how to use credit cards to maximize your business efficiency is a great resource if used with a sense of accountability and awareness. Choosing to use a business credit card can offers financial flexibility, rewards, security, and convenience.