Business credit cards can be powerful tools for your business to get the financing it needs. Not only does a business credit card allow you to keep your business expenses separate from your personal expenses, but it also allows you to earn bonus points, miles, or cash back on business spending.
Most business owners don’t realize they could qualify for a business credit card, even if they don’t have employees. Gig workers like Uber drivers, freelancers, and other independent contractors could all be eligible for a business credit card. This can unlock special financing offers, lucrative welcome bonuses, and access to higher credit limits than personal credit cards.
Here’s everything to know about getting a business credit card and why you might want to consider doing so.
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What are the main differences between a business card and a personal one?
Business credit cards work largely the same way as personal cards, but they have a few distinct differences. First, the reward structure is often focused on business categories — think shipping, office supplies, cloud storage, or monthly credits for business programs. If you have high spending in any of these categories, you could find a lot of value in a business credit card from the increased earning potential alone.
Similarly, business cards tend to have higher credit limits and welcome bonuses than personal credit cards. At the time of writing, the American Express Gold Card has a welcome bonus of 60,000 Membership Rewards points after spending $6,000 on purchases in the first six months of card membership. Meanwhile, the American Express Business Gold Card was offering 100,000 Membership Rewards points after spending $15,000 on purchases in the first three months of card membership. That is substantially more value, but also requires significantly more spending.
On the other hand, personal credit cards often have more consumer protections. After all, they are used for consumer purchases. They can also have longer introductory APR periods. This isn’t to say that a business credit card can’t offer an intro APR, but it might be less common or have stricter terms than a personal card.
The other major difference between business and personal credit cards is where your credit history gets reported. Personal credit cards report to the three main credit bureaus: Equifax, TransUnion, and Experian. Business credit cards generally report to business credit bureaus like Dun & Bradstreet. Business credit scores are also on a different scale from personal scores. Note that some issuers might still report business account activity to consumer credit bureaus, especially in the case of a default.
What are the benefits of getting a business credit card?
A business credit card can be a fantastic choice for small business owners with several employees and sole proprietors alike.
Higher credit limit
Many business credit cards have a flexible spending capacity, so you don’t have a preset spending limit. Instead, your spending limit adapts based on your spending behavior and payment history. Cards with this feature are usually charge cards instead of credit cards, meaning they must be paid off in full every month.
Business cards typically have a higher limit than personal cards, which is helpful for business owners who need to make large purchases.
Better welcome bonuses
You can often find phenomenal welcome bonuses with business credit cards. For instance, at the time of writing, the Capital One Venture X Business is offering up to 350,000 bonus miles to new cardholders. However, sky-high welcome offers are usually associated with sky-high spending, and this is no different — you’ll earn 150,000 bonus miles after spending $30,000 in the first three months, and an additional 200,000 bonus miles after spending $200,000 in the first six months.
If you’re a gig worker, that might be impossible to reach, but if you’re a business owner with high monthly spending, this can be a fantastic way to get a considerable number of points quickly.
Tailored earning potential
There are many business credit cards on the market, so you can choose a card that aligns with your business expenses. For instance, the Chase Ink Business Cash earns 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable, and phone services. If you have a brick-and-mortar office that needs supplies and internet, getting 5% cash back each month would be very advantageous.
On the other hand, the American Express Gold Business card allows you to earn four points per dollar spent on your top two eligible categories each month, including everything from advertising and cloud system providers to restaurants and transit purchases.
No business is the same, so tailoring your earnings to your business expenses can be very lucrative.
Business features
If you have employees who have work expenses, applying for a business credit card can make a lot of sense. You can typically get employee cards at no additional cost, which can simplify your bookkeeping.
Many business cards also come with business features like year-end summaries and the ability to add account managers and download records directly into QuickBooks.
Keep business and personal expenses separate
You’ll be thankful to have a business credit card when tax season rolls around. As long as you stay diligent in putting all of your business expenses on your card, you won’t have to sort through each of your personal credit cards to determine what is and isn’t a business expense that needs to be reported and deducted on your taxes.
It also means that you aren’t personally liable for business purchases. However, you might be required to submit a personal guarantee when you apply for a business credit card, which essentially says you are responsible for paying your credit card bill if the business can’t pay it.
Other benefits
You can have multiple cards from the same bank without being impacted by typical application limits. For example, Chase’s 5/24 rule essentially says that if you have gotten approved for five or more credit cards in the last 24 months, you’ll automatically be declined for a new card.
Luckily, most business credit cards don’t count toward this limit, so you can get several business cards and still qualify for a personal card.
Who qualifies for a business credit card?
You don’t need to be a Fortune 500 CEO to get a business credit card. You don’t even need employees. If you are a sole proprietor, freelancer, contractor, consultant, reseller, or gig worker, you could qualify for a business credit card. You’d also qualify for a business credit card if you are a small business owner with employees.
When applying for a business credit card, having an Employer Identification Number (EIN) is helpful, but it isn’t required. You can get an EIN from the IRS for free after registering your business.
What is needed to apply for a business credit card?
Applying for a business credit card is basically the same as applying for a personal credit card, but you’ll need additional information. You’ll provide your personal details, including your name, Social Security Number, address, date of birth, and income.
Then, you’ll need to provide your business details, which can include the following:
- Business name, address, and contact information
- Time in business
- Category/type of business (what services do you provide/what does your business do?)
- Business structure (corporation, partnership, sole proprietorship, limited liability corporation, or nonprofit organization)
- Number of employees
- Business revenue and expenses
- Tax ID (like an employee identification number or social security number)
Summary
You should seriously consider applying for a business credit card if you are a business owner. Whether you’re looking for a no-annual-fee cash back credit card or a premium travel card, there are plenty of business credit cards on the market to satisfy your needs. Getting a business credit card is a smart financial move that enables you to earn valuable points and miles on your business spending while keeping your business expenses separate.
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