Do I need a business credit card if I am self-employed?

If you are self-employed, it is not a legal requirement to have a business credit card, since you can make any purchases using your debit card or business current account.

However, having a business credit card can significantly save you time and effort by putting all your business expenses in one place, making it easier to submit your tax return to the HMRC and earn rewards too.

Manage your expenses more efficiently

A business will always incur costs and expenses, if you are self-employed, a freelancer or a contractor. You will usually need to pay for your phone, computer, travel and any other tools that you might need for your business.

If you are using your personal account to make all your business expenses, this is perfectly viable, but can create a lot of work when submitting your tax return.

You need to find out what are your business expenses, since this will allow you to claim some tax reductions and also work out your overall profit for the year.

However, if you are using your personal account, you risk mixing everything up with your day-to-day living expenses and it can be quite a hassle sorting this out and getting it right for your tax return.

But having a separate business credit for all your expenses can be an efficient way to keep everything separate and you will just need to use your bank statements or download a report to get all your expenses together.

As with all credit cards it is not free money. It is possible to get into serious debt by putting all your expenses on a business credit card. If that does happen there are ways out of it. Keep in mind that you can get an IVA even if you are self-employed. But be sure that you are using the best IVA companies that can give you the best ways to manage your debt.

What things can I put on my business credit card?

Any business expenses can be put on a credit card including:

• Travel – car, petrol, train, air, bike, accommodation.
• Food – lunch for work, teas, coffees, water, office drinks and socials.
• Marketing costs – Google Adwords, hosting, web services, SMS services, social media advertising, brochures, print, web design and more.
• Equipment and other necessities – mobile phone, work clothes, computers, chargers, work chairs and desks.

Not all retailers or providers will be able to accept business credit cards, but you can always draw down the money in cash, which is an option offered by Capital on Tap. Alternatively, you can pay using your business current account or by cheque.

Can I earn rewards?

Yes, some of the biggest rewards you can earn through credit cards are reserved for business credit cards. This includes earning cashback, discounts and points from Avios, hotel groups and retailers such as Debenhams, John Lewis, Waitrose, Nectar and Tesco Clubcard.

Be sure to take advantage of introductory offers which might give bonus points in your first month or if you pay a higher amount in the first few months e.g £5,000.

Is there anything else I should know?

• You can use two (or more) different companies for your business credit card and business bank account.
• To earn the greatest rewards, the provider may charge a monthly fee to use the credit card.
• Falling behind on repayments may incur charges and late fees.