In a competitive market like Los Angeles, small business owners need every advantage they can get. One simple and effective way for small business owners to help themselves is to acquire a business credit card. Doing so offers several significant benefits. Namely, it can help you build business credit, limit personal liability, increase operational efficiency and protect against a cash flow crunch. Establishes Business Credit History In the life of every successful small business, there comes a point when a company needs a significant cash infusion to reach the next level of its development. However, in order to secure that mission-critical financing, the company should meet four important requirements: It should be in operation for two years, and have monthly revenue, material assets and good business credit. Maintaining a business credit card is a great way for a burgeoning company to establish the positive credit history they need to secure loans and larger lines of credit. Reduces Personal Liability One issue that entrepreneurs struggle with, especially when they’re just starting out, is separating their business and personal expenses. When encountering unexpected incidental costs, like having to quickly replace a company smartphone, it’s not uncommon for small business owners to go out of pocket. While this tendency is understandable, it can lead to some serious problems down the line. As the US Small Business Administration points out, intermingling personal and professional expenses can breach the protection offered by incorporation and leave your personal assets at risk. Using a business credit card to cover incidentals will keep your corporate protections intact and your personal assets secure. Increased Operational Efficiency In addition to keeping a firm separation between personal and professional finances, a business credit card can also help a small company improve its record-keeping. Come tax time, a company will need to account for all of the prior year’s business expenses. Having a business credit card will allow owners to keep track of those expenses, from larger inventory purchases to office supply replenishments. Also, having a comprehensive record of your business expenses can be very helpful in identifying ways to reduce costs and increase profitability. Protects Against Cash Flow Crunch An unexpected cash flow crunch can derail a small business’ momentum with unnerving speed. Consequently, founders should take steps to protect themselves in the event of a protracted economic slowdown, client payment default or natural disaster-related loss. A business credit card can provide your company with the short-term cash flow it needs to weather the inevitable rough patches every business faces. The foregoing information is provided by City National Bank (CNB). Unless otherwise stated, opinions expressed are those of the respective authors and not necessarily those of CNB. The information is provided without warranty and no recommendation or endorsement by CNB is intended or should be inferred unless specifically stated. Visit City National Bank's News & Insights for small business tips, trends and updates. 
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