Getting Company Credit Cards For Employees?

small image of platinum business cardQ: I run a business and would like to know the best approach I should take in 2013 for getting and managing employee credit cards.

A: Getting company credit cards for employees will benefit you in a number of ways…

Benefit #1: Streamlines accounting
Most small business owners will open one credit card and account then issue secondary cards to their employees under the primary account. This makes accounting a breeze, because you get to enjoy the convenience of having everything on one bill, with the benefit of having separate, itemized activity for each employee card.

Benefit #2: Boosts your rewards
Business cards usually have higher rewards than personal cards do, so right off the bat you are earning more. But it gets even better when you issue secondary cards to your employees – all of the rewards they earn will be credited to your main account.

Benefit #3: Safer than cash and checks
With cash you have virtually no paper trail and of course that opens the door for fraud by your employees. Checks are safer but in no way fool proof. With company credit cards for employees, all spending will be accounted for including categorizing each transaction.

Important Tips for managing employee cards in 2013

As a warning or word of caution, I want to let all my fellow business owners know that it is extremely important you consider these three points:

Tip #1: Set appropriate limits for each card
After you apply and are approved, you can set separate spending limits for each employee card. So if you have one employee that barely use their card, you can give them a low limit. For those that need to spend more on supplies or inventory, you can give them a higher credit limit.

Tip #2: Define what spending is allowed
You can order your company’s cards for employees now at the time of application, but before you actually hand out the cards, make sure you go over the rules for their usage. As with anything in life, getting things in writing is better than verbal agreements, so it might not be a bad idea to type up a list of rules for each employee and have them sign it before you give out the credit cards.

Tip #3: Never allow personal charges
Some businesses might allow employees to charge personal expenses to the company card, as long as they pay them back. Be warned… this practice is nothing but a disaster waiting to happen, for a multitude of reasons. What if they quit? What if they “forget” to properly identify a charge as being personal and in turn, don’t pay for it? It’s best to keep personal and business separate. If an employee is short on cash and needs to buy something, they can use their personal credit card for that.

Best credit card offering free employee cards?

I highly recommend the Chase Ink cards (it’s what I use for my business). Take a look at my review to see why they are the best option for employee credit cards…

Chase Ink credit card review (includes special signup bonus)

 
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What about tax implications?

Records the employer needs?

IRS info?