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Do you need a business to apply for a business credit card?
This is a common question with a surprising answer. Many people don’t know this, but many credit card companies have different requirements for what constitutes a “business.”
In some cases, almost anyone can apply for a business credit card, even if they don’t own a traditional “brick and mortar business.”
And this can be a good thing. Many business credit cards offer excellent perks, such as large sign-up bonuses, additional cash back or rewards points in categories businesses are likely to spend, such as travel, gas, restaurants, and office supply stores.
Some business credit cards even offer access to airport and hotel lounges, which is a nice benefit if you travel frequently.
This guide will cover who is eligible for a business credit card and how to apply.
Who Qualifies for a Business Credit Card?
If you already run a business, have established an Employer Identification Number (EIN), and have incorporated your business, then you’re probably already eligible to apply for a business credit card.
But many others may qualify for a business credit card, even if they don’t have a large or established business. Most credit card issuers will consider your application for a business credit card as long as you have “some” related business activities and your intent is to turn a profit from your business.
This can be almost anything that is designed to make you money. Do you participate in any of the following:
- Make money from a side job?
- Do consulting or freelance work?
- Make money online?
- Sell things on Etsy, eBay, Amazon, Craigslist, or local classifieds?
- Something else designed to make money?
If the answer to any of the above is “yes,” then you may be eligible to apply for a small business credit card. I’ll show you how.
Compare the rates, fees, and rewards of top credit cards for military servicemembers and veterans, including cards with waived annual fees under the SCRA.
You Can Apply for a Business Credit Card as a Sole Proprietor
Business credit card applications have a section for business type, business name, and Employer Identification Number (EIN). If you are doing business as yourself, then you can select “sole proprietor” as your business type, use your name as the business name, and use your Social Security Number as the tax ID number.
It’s that easy.
Who can be a sole proprietor? Almost anyone can claim to be a sole proprietor, the most basic type of business recognized by the IRS. According to the IRS, “A sole proprietor is someone who owns an unincorporated business by himself or herself.” This means that anything you do can be considered a business. This can include selling things on eBay, holding garage sales, babysitting, freelance work, consulting, coaching, or anything else.
Even though a sole proprietorship is a legal business, there are no formal requirements such as paperwork or registration fees for starting a sole proprietorship. The only qualification to be a sole proprietor is to claim you are a sole proprietor. It’s as easy as that.
Note: It’s important to understand that with a sole proprietorship, there is no legal separation between you and your business. Your business and personal debts are considered the same.
Why Business Credit Cards Can be Good for Individuals
If you apply for a business credit card as a sole proprietor, you can also use it for personal use. Though you may find it a good idea to keep your business expenses separate for tracking and tax purposes.
That said, some business credit cards are actually better than a card offered by the same company and branded with the same name. So you may look into these options if you need a business credit card.
Here are some of the reasons business credit cards can be good for individuals:
Better rewards and bonuses. Credit card companies know that most businesses charge more every month than individual customers and are often more profitable. This means the competition is fierce and credit card companies will do what it takes to recruit new customers. This works in your favor as they often have better cash back and rewards programs and sign up bonuses to attract new customers.
Higher credit limits. Many business credit cards offer higher credit limits compared to cards issued to individuals because businesses often take in and spend more money than individuals. Why is a higher credit limit good for an individual? Because your credit score is determined using a formula that includes credit utilization (how much of your available credit you use). A higher credit limit can raise your credit score, provided you don’t max out your limits.
Balance transfers and 0% introductory offers. A lot of people use balance transfer offers to take advantage of credit card arbitrage (paying 0% interest on money borrowed from credit card companies). This can be a profitable enterprise. Others like to take advantage of 0% introductory offers so they can go out and charge some startup costs and pay them off over time without paying interest. When used correctly, these actions can either make or save you a lot of money.
Almost Anyone Can Apply for a Business Credit Card
I applied for my first business credit card as a sole proprietorship, soon after starting this site. I later formed an LLC to make it easier to separate my expenses and I later signed up for another business credit card under my LLC.
I currently use the Ink Business CashSM Credit Card from Chase and another business card. The Chase card offers much better rewards, so I use it for most of my purchases.
I have had my other business account open longer, so I don’t want to close it, as the age of credit is a big part of your credit score (leaving the account open will help maintain my high credit score).
Will All Credit Card Issuers Issue a Business Credit Card to Sole Proprietors?
Each credit card company has its own rules regarding how they perform their credit or risk analysis. Some credit card issuers are more strict than others, and there are no guarantees you will be approved for each credit card you apply for.
I have had business credit card applications approved when I applied as a sole proprietor. And I have also had other credit card companies request additional information regarding my business, including the formation paperwork, income statements, and additional information.
So each credit card application should be viewed on a case-by-case basis. That said, I believe a good business credit card can be very valuable and is worth applying for if it will help you manage your business spending as well as earn rewards.
I have earned thousands of dollars in business card rewards through spending we would have made anyway (all of our regular fixed monthly expenses, such as cell phone bills, utilities, website hosting, and similar expenses are on autopayment with our credit cards when possible).
Recommended Business Credit Card
Most of the large credit card issuers have a small business credit card in their offerings. I’m a fan of getting a small business credit card that offers a solid rewards program, either in the form of cash back, or travel rewards, such as airline miles, hotel points, or similar rewards.
My current business is internet-based, so I make a lot of online transactions. But since I only travel a few times per year for my business, I personally prefer a cash-based rewards program. The card listed below is the card I use for most of my business transactions. You can view our list of best business credit cards for more options.
Chase Ink Business Cash® Credit Card
The Chase Ink Business Cash® Credit Card is my preferred business credit card. I have been a Chase customer for over 10 years now, with a Chase bank account, a Chase Freedom credit card, and the Chase Ink Business Cash® Credit Card, which I use for the majority of my business expenses.
The excellent customer service, access to business banking, the ability to link my credit card to QuickBooks Online, and the rewards programs have made me a happy customer.
Limited time offer: bonus_miles_full.
Excellent Rewards Program: The Chase Ink Business Cash® Credit Card features an excellent rewards program, with
- 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on the internet, cable and phone services each account anniversary year
- 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
- 1% cash back on all other purchases, with no limits
- Your cash back rewards do not expire while your account remains open
To top it off, there is no annual fee, you can get employee cards at no additional cost, and there is a intro_apr_rate,intro_apr_duration, with a reg_apr,reg_apr_type rate after the introductory period. Check the official Chase website for full offer details, pricing, and terms.
You can compare the Chase Ink Business Cash® Credit Card and other small business credit cards on this page.
The Military Wallet has partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers.
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Brandi says
I am wanting to sign up for the Chase Southwest Business card, right in the cardmember agreement portion it says “I certify that I am aware that this is a business credit account not to be used for personal or household expenses”. I am slightly weary of signing this form, knowing that I will need to use it for more than just my business if I want to earn enough points for the sign up bonus. Is this just verbiage that they can in no way enforce, or should I actually not sign up, as I won’t meet the requirement with just my business expenses?
Ryan Guina says
Brandi, some household expenses can also qualify as business expenses. For example, if you have a home office, you can deduct a portion of your utilities, such as electricity, Internet, telephone, cell phone bill, etc. Use your own judgment to determine which expenses you believe will qualify.
Another thing you may consider is prepaying certain business expenses to reach your sign up bonus spending requirements. For example, I run websites. Some of my business expenses can be paid by the month. But there is also a discount if I prepay for a year. So I have prepaid for a year of services before in order to reach the spending requirements. This had the added benefit of saving me money in the long run which was a win-win!
Jua says
hello,
I am very interested in getting a Chase Ink Business Card. I am currently into dropshipping and I need a credit card to do fulfillments, I have a name fr my store but that isn’t the only store I am going to have open. Can I use 1 name in the card that isn’t the stores name?
Please email me if you don’t understand the question.
Thank You,
Juan
Ryan Guina says
Juan, you should use the business name. For example, you can call your business “Drop Shipping Enterprises,” or whatever you want and you can have many stores under that main business structure. I recommend setting up your business properly before you apply for credit cards. Speak with a professional about the proper set up if you aren’t sure how to do it. Spending a little money up front is worth it in the long run to avoid expensive mistakes!
Mike says
Business cards generally have no impact on your personal credit score. Keeping one open won’t affect your average age of accounts, and neither will closing it. But the Discover business card you keep open is one of the handful that do report to your personal credit — together with business cards from TD Bank and Capital 1.
Christian Green-Byrd says
Hi there, I started an LLC and I’m currently waiting for my state to process my documents. It’s taking longer than I expected, and I was wondering if it’s possible to apply as a Sole Proprietor (sorry for the spelling) so I can get my equipment ready. Will I get in trouble when my state is done processing my LLC documents, or does it not matter? Can I always change sole proprietorship as an LLC with my credit card company later on?
Ryan Guina says
You should be able to tart your application as a sole proprietor. Just use your personal information on your application. You may need to follow up with the bank if they request more details regarding your business, revenue, or other information.
Kevin says
I have a few questions. Is it possible to get one business card as a sole proprietor and another of the same card via my LLC (with an application personally guaranteed by me) at the same time? Would a card approved with an LLC offer a higher credit limit, assuming all else is equal to the sole proprietorship? Lastly, I frequently open new credit cards with my personal credit–is it likely my application via my LLC would be approved where an app for a personal card would be denied due to too many inquiries, i.e. can I successfully guarantee a card if I have too many hard pulls to be able to be approved for another personal card?
Ryan Guina says
Kevin, you may find it difficult to get two identical business cards from the same issuer, unless you have separate businesses. Let’s say you have an LLC that has established credit. You could apply for a business card through your LLC, and it should be related only to your business. You could then apply for the same card as a sole proprietor. But your application should list a different business. Some credit card issuers simply won’t approve two business cards under the same name unless there are different established LLCs or other business formations.
Based on what you have written, it sounds like sign up bonuses is the goal here. Some credit card companies are OK with customers opening multiple cards, while others are less likely to approve it. The best I can say is to contact the company, explain what you are trying to do and why, and see if they will approve it.
Carlos says
Hi, Ryan would you happen to have any insider information regarding the Capital One Spark Classic Business credit card?
Their minimum credit score requirements?
Regards
josh says
I am very interested in getting the Chase Ink cards, but in their credit agreement it specifically says the card is for business use only, and not for personal use. How is everyone getting around this provision? Is there some grey area or special case because you are a Sole Proprietor?
Ryan Guina says
You can get this card as a sole proprietor. They just run your SSN instead of a business EIN (employer Identification Number). I’m speaking from experience – there was an issue with my business address because I had moved and my business address wasn’t up to date in the system they were using, so they ran it as a sole proprietor and there were no issues opening the account. Overall, I’ve been very happy with it. I can only speak for my personal experience though.
Josh says
Well, I have no doubt I can open the account. My question is about usage of the card for personal purchases. It seems the credit agreement is that purchases will be for business only. I was just wondering if anyone knew about exceptions for this, or if people just weren’t aware?
Shawn says
It was the bank who approached to me first and issued me a business credit card for personal use because I didn’t have a business at all. But later they hiked my interest rate up and insisted that my debt is commercial debt but I think it should be personal debt because it was for personal use and I gave them my SS ect to warrant the card use. Does my argument make sense?
chris says
also i did read that business cards have less purchase protection for individuals. my credit limit was the same though as my other cards when i had it. simmons first platinum at 7.25 interest rate is a great keeper card if you ever carry any debt beyond those 0 percent interest card time periods tooo
chris says
ok thanks ryan, i cancelled it anyways, it was annoying me that the store clerks asked me for a PO number and just felt weird having it, everyone looks at me funny =p i didnt find the cash back to be any better than my amex blue cash everyday or the southwest miles. southwest is 2 percent back currently and the annual fee pays for itself and actually gives you a dollar. the amex gives 3 percent on groceries and 2 perecent on gas and dept stores like macys etc, and 1 percent on everything else including walmart etc
chris says
if you dont make enough to file taxes, would having a business card give you any new obligations for either tax or applying for social services, such as food stamps?
Ryan Guina says
It could give you new tax obligations if you have a separate business tax ID number (Employer Identification Number, or EIN). But it shouldn’t affect your ability to apply for social services.
CJ says
I have a question. I am currently in a sales position with a company that produces revenues in excess of $40 million annually. Our sales force is small and the company does not offer business cards to the sales team. My monthly business expenses total around $5,000 and come out of my pocket and are later reimbursed by the company. I have been using my personal credit card for this. I want to separate these transactions from my personal card. I’m looking for a card with low/no fees , a moderate limit ($10,000ish), and flexibility in repayment – as my ability to pay off balances is dependent on how quickly the company reimburses me. I have limited credit history, and therefore a credit score that hasn’t grown much yet. Would I be able to apply for a business card, even though the business expenses aren’t technically my own?
Ryan says
CJ, anyone can apply for a business credit card – you would just use your SSN where the application calls for your business identification number. If you need a flexible payment schedule, then take a look at The Plum Card(R) from American Express OPEN, which gives a discount when the balance is paid within 10 days, and gives cardholders up to 2 months to pay back the charge without interest if they pay at least 10% on the statement date.
That said, I strongly recommend speaking with your company about having them issue you a corporate credit card – a company of that size shouldn’t expect their employees to pay for expenses out of pocket and file for reimbursement. At least not on such a large scale.
Briana says
I think I’m going to hold off on applying for a business credit card until I turn the business into an LLC.
badamex says
I got a SimplyCash business card a little over a year ago partly based on this article. I recently saw an ad where they changed the terms and there is now a $50 annual fee after the first year if you don’t spend at least $20,000.
I emailed Amex and they said I am subject to the new fee rule and not grandfathered in. Can you suggest how to get out of this?
Ryan says
badamex, I’m not sure what can be done other than to contact AmEX and ask them to switch you to a business card that doesn’t have any associated fees (I’ve done this before, they are usually good about doing it over the phone). If you don’t want to stick with AmEX then check out this list of Best Business Credit Cards. The Ink Cash(SM) Business Card has a great rewards program, no annual fee, and is accepted in more locations than American Express cards.
As for the annual fees and changing terms, most of that stemmed from the Credit Card Act of 2009, which changed how credit card companies could do business. Many companies took that as an opportunity to change terms and raise fees before the changes went into effect. It’s unfortunate, but there was no way to predict it. A lot of consumers are upset with some of the changes, and many consumers are happy with other changes. If you an’t make it work with AmEx, then I would find a new card. Best of luck.
TJ says
Wish I knew that before I applied! Hope if it gets declined it doesn’t negatively affect my credit score.
Ryan says
TJ, it shouldn’t affect your score much if you aren’t approved. It’s usually a couple points at most, and the effect goes away as time passes. I wouldn’t be concerned.
TJ says
I’m a bit skeptical. With most crdit cards, they will show instnat approval, however with the business one, they said they would send me a decision via mail in 14 days. Maybe they’re more selective now than when this blog was written?
Ryan says
TJ, yes, the business credit card market and the credit card market in general have changed in the last year and a half since this was written. Credit was much easier to receive a couple years ago. However, don’t let that discourage you. There are many good options to choose from. Check out this article: Best Credit Cards: Cash Back and Rewards Points.
Ryan says
Hello Livia,
To answer your question, the two business credit cards I linked to in the article are great cards to choose from. Here is a list of the Best Business Credit Cards.
Other good business credit cards can be found in this article – Best Gas Rewards Cards.
All of the cards in this e-mail come with cash or point rewards systems which will earn you additional cash back on items like gas, office supplies, cell phone service, restaurants, and more.
Livia says
what credit cards can i apply for using business credit only?
Ryan says
Next Millionaire,
Some business cards have annual fees, so that is something you want to look out for. That is actually why I signed up for the Discover Business Card. It has a great cash back program, gave me a $100 sign up bonus, and doesn’t have any annual fees. It’s a very good business card.
Ryan says
That’s true if you are taxing your income as a business, but my understanding of a sole proprietorship is that there is no separation of business and personal income. But I’m not a tax pro, so be sure to talk to one before filing taxes. 🙂
Dividend Growth Investor says
I remember vaguely from my tax class that in order to be considered as a business for IRS purposes, you have to earn a profit for at least two out of the past five years. The thing is that if you are losing money on this “business” IRS could contest that this is actually a hobby and you lose a preferential tax treatment.
Ryan says
MoneyEnergy,
Sole proprietors only do one set of taxes. As a sole proprietor, there is no distinction between the money earned in your business and your regular income. This is not always the case for other business types.
MoneyEnergy says
thanks for pointing this out, I did not know this. But yeah, I would definitely want to know more about the different types of businesses before doing this personally, just for my own sake. Especially with taxes. If you’re a sole proprietor, do you do two sets of taxes, etc.
RCJackson says
Hello! Sorry to be a stickler, but the IRS doesn’t allow “anything” to be a business.
It’s really important that it is NOT a hobby and you are engaged in the transactions for the purpose of profit and a form of self-support (not just extra cash on the side) by incurring consistent time and expense into marketing and organizing the business.
Haha, what a downer, right?
Dave @ MilesTalk says
That’s actually not true. a) you can have a business credit card without having a business. The IRS isn’t involved there. b) If you have a real business, it can *absolutely* be a side-hustle. There is a rule that it must make a profit (I believe 2 in 5 years, but you can fact check that), but it 1,000% need not be your purpose to support yourself from it.
Ryan says
There are some cards that you can convert points to cash, but the conversions are always different depending on the card company. That’s one reason I prefer cash; I always know the conversion rate. 😉
There are some rewards cards that do pay cash and don’t apply your rewards to your balance.
Dividend Growth Investor says
Cash Back is king. I am wondering however if there’s any credit cards that give good points ( more than 1 point for every dollar spent) that could convert into real cash ( a check sent to my door in my name).
I use Chase Rewards and they apply the rewards directly to my balance. Which is nice, although I want to simply get cash for whatever reasons..
Ryan says
Tough break, Jesse! I always go for the cash back! 🙂
Ryan says
LOL. I got the mail offers for letterhead, pens and other paraphernalia as well. One company went so far as to send me a sample pen with the name of my LLC on it and a package to order more of them. The pen is nice, but I don’t really advertise my company. I only formed it to separate my business expenses for this and other sites. Good idea for them though! 🙂
Fabian says
Hi, i have a question since you are on top of this matter, I am buying a restaurant and i am creating an LLC. This restaurant has been in business for 28 years. so when i apply for my business credit card since the tax id it is almost new, does this damage the amount of credit they will give me?. thanks
Ryan Guina says
If the business is new and you haven’t established business credit yet, the issuing bank may require you to open the credit card under your name (or at least with your SSN) instead of the business information. Establishing business credit can take some time. You may find it beneficial to work with a local bank that can see your books. They may be more willing to work with you to establish business credit and/or open a business credit card. Best of luck with your business!
Jesse says
I really wish I had done this to start with. Ive over the years built up about 40k worth of points on my visa and its basically worth nothing. Their rewards are awful.
Meg says
Very true; I have a business credit card and it was not at all difficult to get. You basically just have to plug in a company name.
However it would be smart to actually “own” that company name which would be known as a “DBA” or “doing business as” name before you go around using it.
You can go down to the courthouse and pay $15 (in TX at least) and reserve any available business name as yours for a period of 10 years or so. Then with the piece of paper they give you you can also open business checking accounts and do anything else any business can do.
On a related note: I started getting offers in the mail for business letterhead, business cards, even shirts and other merchendise to put my business name/logo on after I got my business credit card. Any person can order and receive that stuff too! Realizing that made me realize I need to be more wary of every “business” despite their professional uniforms/cards/letterhead.