Business or personal liability: What to consider when choosing a business credit card

Are you still using your personal credit card to pay for business expenses? If so, do you find it challenging to separate personal and business expenses?

Running a business is difficult enough without bogging yourself down with tasks like separating expenses. Maybe it’s time to ask yourself if you should you still be using your personal credit card for your business.

Here’s why both you and your business can benefit from having a business credit card.

Like personal credit cards, business cards are a convenient way to pay for purchases. You can also authorize your employees to use the account, issue cards to them, set limits, and monitor and control their spending.

Credit cards are less cumbersome than cheques and cash and they’re accepted worldwide. Plus, you can extend your cash flow by taking advantage of the 21-day grace period before payments are due.

Most importantly, separating your business and personal expenses saves you time and money. You no longer need to identify business charges in your personal credit card statements, so you have more time to focus on your business. And your bookkeeper or accountant spends less time and effort tracking your business expenses and deductions at tax time.

Now that you understand the benefits of having a business credit card, let’s discuss what type of credit card application may best fit your needs.

Many business clients apply for a personal liability credit card because the application is much simpler than for a business liability card. Both options are great for separating personal and business expenses, but which credit card is right for you?

Credit is based on your personal financial information and some business financial information. As with a personal credit card, the debt appears on your personal credit bureau report. It affects your personal total debt service ratio (TDSR) and your ability to personally borrow money.

For example, if your personal TDSR entitles you to a $40,000 credit limit, you would split that amount between

• your existing personal credit facilities, such as your card, line of credit, overdraft, and
• your personal liability card, such as the CIBC bizline® Visa* Card for Business.

Credit is based on the financial information and credit history of the business itself, and of each business owner. You still provide a personal guarantee and are personally liable for the debt.

The debt you accumulate using this type of credit card is associated with your business entity, which appears on your business credit bureau report and financial statements. The benefit of using this type of credit card is that the debt is not reported on your personal credit bureau and does not affect your personal TDSR.

You can choose a CIBC Business Credit Card with personal liability or a CIBC Business Plus Credit Card with business liability. Basic cards have low or no fees and low rates. Travel rewards cards include comprehensive travel insurance. Information about travel points. Opens in a dialog.

Explore CIBC business credit cards

These are ideal for start-up businesses with limited financial history — generally businesses that have been in operation for less than 2 years. Although this card is reported on your personal credit bureau, you still reap the benefit of not having to separate your personal and business expenses. You can add up to 9 cardholders on your account.

Choose from 3 personal liability credit cards:

• CIBC Aventura® Visa* Card for Business
• CIBC Aeroplan® Visa* Business Card
• CIBC bizline® Visa* Card for Business

These are ideal for established businesses that have been in operation for more than 2 years, such as corporations, not-for-profits, and partnerships. Up to 15 cards can be issued per account. You can manage spending limits and assign different account permissions for employees using Visa Spend Clarity for Business (PDF, 690 KB) Opens in a new window..

Choose from 3 business liability credit cards:

• CIBC Aventura® Visa* Card for Business Plus
• CIBC Aeroplan® Visa* Business Plus Card
• CIBC Corporate Classic Business Plus Visa* Card

Applying for a CIBC business credit card is like applying for any credit card.

• Apply quickly and conveniently online
• If you prefer, you can apply with the help of a CIBC business advisor Opens in a new window.
• Make sure you have the required information and documents (PDF, 35 KB) Opens in a new window.

Applying for a CIBC Business Plus credit card is like applying for a business loan or line of credit.

• Apply with the help of your CIBC business advisor
• To prepare for your meeting, review the Business Credit Application Document Checklist (PDF, 165 KB) Opens in a new window.

If you’re still not sure if you need a business credit card, it’s important to understand that establishing your personal and business credit cards separately helps you manage your spending, cash flow and revenue. It isn’t just a milestone of growth — it will set you up for success. Read more about why you should keep business and personal accounts separate.

To create a tailored plan for your business needs and help you achieve your goals, meet with us Opens in a new window.. We’re here to help. Talk to a CIBC business advisor today by calling 1-866-992-7223 Opens your phone app..

If you’re looking to explore your credit card options for a new or existing business, we can help.

Connect with a dedicated CIBC Business Advisor who will work with you to understand your needs, provide expert advice and customized financial solutions. Whether you are looking to explore your financing needs, learn how to set up a business account, or you just need a sounding board, we’ll make it easy for you to make your ambitions a reality.

• Thinking of a new business credit card? To see which card will best fit your business needs, check out our options.
• Considering your financing needs? Explore the Business Services Digital Advisor.
• Need to open or upgrade a business account? Here are the accounts we offer to fit your business.
• Have questions about managing your budget? Check out our cash management opportunities.