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Business cards can be a great way to make convenient transactions, finance purchases, streamline your accounting and establish business credit, even if your business is small. You may want a business credit card if you have a sole proprietorship, part-time gig, consulting work or you sell goods on the side.
You can get a business credit card without a traditional business as long as you have a qualifying enterprise. Here's what you need to know about business credit cards for nontraditional business owners.
Can I Apply for a Business Credit Card Without a Business?
You can apply for a business credit card even if you don't own a major corporation or chain of restaurants. Depending on individual card requirements, you can apply for a business credit card even if your venture is a sole proprietorship, side hustle or home-based business. Here are a few examples of nontraditional businesses that generally qualify for a business credit card:
- Reselling items online on sites like Depop, Etsy, Poshmark or Facebook Marketplace
- House sitting, babysitting or pet sitting
- Rideshare or food delivery driving
- Renting properties on sites like Airbnb or VRBO
- Leasing apartments or homes as a property owner
- Freelance writing or editing
- Business consulting
- Tutoring, teaching or training
- Building websites
- Operating a food truck or food cart
Business Credit Card Requirements
To apply for a business credit card, you'll need to provide basic information about yourself and your business. In addition to your full name, address, Social Security number and annual income, be prepared to provide the following information:
- Business name, address and phone number
- Industry
- Business structure (corporation, partnership, LLC, nonprofit or sole proprietorship, for example)
- Your role in the business
- Years in business
- Number of employees (if any)
- Annual business revenue
- Estimated monthly expenses
- Federal tax ID number (Employer Identification Number for corporations and partnerships, Social Security number for sole proprietors)
Checking Your Personal Credit
Unless you're applying for a corporate card in the name of your business, chances are good that your card issuer will check your personal credit and make an approval decision based on that. For businesses that haven't established much (or any) business credit, this might be good news. As with personal credit cards, a higher credit score typically qualifies you for lower interest rates and better terms.
If you're not sure where your credit stands, you can get your credit score and report for free anytime with Experian.
Benefits of Getting a Business Credit Card
Although business credit cards have their pros and cons, using a business credit card for business expenses has some distinct advantages. Here are a few things you can do with a business credit card that you can't do with your personal card.
- Establish business credit: A business credit card can help you build your business credit score, which is helpful if you want to secure business loans or financing in the future. To help you establish business credit, your card issuer must report to a business credit bureau (Experian, Dun & Bradstreet or Equifax).
- Streamline accounting: Using a dedicated business card makes it easier to track business expenses for bookkeeping and tax reporting. Even better, some business cards categorize spending for you.
- Separate business and personal finances: Maintaining separate business and personal finances is key for corporations and partnerships that want to conduct themselves as separate business entities. As a sole proprietor, you benefit by demonstrating to the IRS that you are a legitimate business and not a hobby.
- Finance inventory and expenses: Having a credit card helps when you have large purchases to finance or need to manage cash flow; for instance, if you purchase goods or services for clients and get paid back later.
- Pay securely: Credit cards are a convenient and secure way to pay when you're making large purchases or doing transactions online. You can also set up cards with spending limits for your employees, providing them with a safe and easy way to make purchases for your business.
How to Choose a Business Credit Card
Choosing a business credit card is similar to choosing a personal credit card. You might start by researching business credit cards that align with your credit score, then zero in on cards that meet your individual needs. The following questions might help you organize your thoughts.
Does Your Business Qualify for the Card?
Business credit cards may be geared toward major corporations or smaller enterprises with modest needs. Look for a small business credit card you qualify for, one that caters to your size and style of business.
Also consider credit requirements. Many business credit cards require excellent personal credit, although you can find business cards for applicants with good credit (a FICO® Score☉ of 670 to 739) as well as secured cards for business owners just starting out.
How Will You Use a Business Credit Card?
If you plan to use a business credit card for major purchases—to stock up on inventory or buy manufacturing supplies, for example—look for a card with an ample credit limit and the most favorable interest rate. If you only intend to use your card for minor expenses that you'll pay off each month, consider shopping for a card with low fees.
What Are the Fees and Costs?
Business credit cards typically charge annual fees, transaction fees and late fees. Review these charges before signing your card agreement. Also, business cards tend to have higher annual percentage rates (APRs) than personal credit cards. Check and compare rates before choosing the right card for you.
What Are the Rewards and Benefits?
Many business credit cards offer rewards, cash back or 0% promotional rates on purchases or balance transfers. If you're an active card user, these benefits can add up. Also look for potentially useful perks, such as free additional cards for your employees or waived foreign transaction fees.
Can You Use a Business Credit Card for Personal Expenses?
While it isn't illegal to use a business credit card for personal expenses, many business cards state in their terms and conditions that they're to be used for business expenses only. Using a business card to pay for and finance personal expenses is technically a violation of this agreement. Your account could be canceled as a result.
Additionally, by using your business card for personal spending, you lose one of the key benefits of getting a business credit card: keeping your business and personal expenses separate.
Business cards aren't the best choice if you need to cover personal expenses. While your card issuer isn't likely to cancel your card if you use it to pay for one stray personal expense, the purpose of a business card is to help manage your business spending. If you need a credit card for personal use, a regular consumer credit card is a better choice—with no business required.
The Bottom Line
Even if your small business is small, having a business credit card to make large transactions, finance equipment or inventory, smooth out your cash flow and establish business credit may be worthwhile. If you're in the market for a business credit card, start by checking your credit report and score for free from Experian. From there, choose the card with the most competitive interest rate, fees and benefits, and give your business the credit it deserves.