Congratulations! You’ve successfully launched (or are soon to be launching) a brand new business. This is no small feat, so if you haven’t congratulated yourself yet, do it. There are, however, a few more logistics to consider before you officially can officially have your business running successfully. One of the most important things to do is to get a business credit card.
There are many perks to having a business credit card, but if you are a small business owner, having a business credit card is not optional. If you’re a small business owner, the lines can be exceptionally blurry between business and personal expenses. By taking the time to get a business credit card, you can avoid doing financial gymnastics come tax season when you’re trying to comb through your expenses for the year.
Having a business credit card allows you to have a totally separate account for your business needs.
So, how do you go about obtaining one of these business credit cards? Glad you asked.
Welcome to the definitive, ultimate guide on how to get a business credit card. This guide will teach you how to apply for a business credit card, the credit cards are the best for small business owners, and how to get approved.
Ready? Let’s begin.
Applying for a Business Credit Card
Now for some fun, let’s talk about how to go about applying for a business credit card. You’ve likely already applied for a personal credit card at some point, but applying for a business credit card is a little bit different.
In order to apply for a business credit card, you’ll need a few things first:
- The official legal name of your business
- This is the name that will appear on your credit card once you’re approved – if you’ve registered your company with the government, that’s the name that you’ll use as the official legal name of your business.
- If your business if a sole proprietor or freelance business, it will most likely be your legal name.
- Your Business’s Tax Identification Number
- If you are a business registered with the government, you’ll use your federally given tax identification number.
- If you’re a freelancer or sole proprietor, you’ll simply use your Social Security Number as your Tax Identification Number.
- Your Business Type
- If you are an LLC or registered with the government, you would mark that down as your business type.
- If you are a freelancer you would simply call yourself a “sole proprietor”
- Pro-Tip: As of May 2018, there were new regulations implemented that if anyone owns more than 25% of your business, they must be disclosed for informational purposes.
- Your Business’ Industry
- When you apply for your business credit card, there will be a list to select from with different industries. Select the one that fits your business and brand best – even if it isn’t an exact match.
- What is Your Role in the Business?
- As you apply for a business credit card, you’ll need to disclose what your relationship is to the business. Are you the owner? CEO? General Manager?
- Logistics of the Business
- You’ll need to disclose an address for your business – if you’re working from home, it will be your home address. If you are renting a space, it will be the address of the office building.
- You’ll also need to disclose how long you’ve been in business. The longevity of your business doesn’t necessarily affect your likelihood of obtaining a business credit card, but it is useful information when it comes to your business credit limit and APR.
- How many employees work for your business? Whether it’s just you, or if your business has 1500 employees, it’s important that you accurately assess how many people work for your business.
- What is your annual business revenue? Even if you’re not making money yet, it’s important to be honest when you answer this question.
- How much money does your business spend per month? This is in reference to your company and business expenses – not personal. It can be an estimation, but try to be realistic when it comes to determining approximately how much you’ll be charging on the credit card monthly.
Other Information Credit Card Companies Might Ask For
Once you’ve filled out all of your business information, the credit card company might need a bit more information on you, the business owner. Information they might ask for includes your:
- General Contact Information: Address/Phone Number/Email
- Social Security Number
- Annual Household Income
Similar to personal credit cards, once you’ve successfully applied for a business credit card, you have to wait to be approved. Now, here’s the fun part: if you are a brand new business with no credit, your business credit card approval will be dependent on what your personal credit score is.
If you are already an established business with its own line of credit, it will be a little bit easier since the credit card companies will be able to base their decision on both the business (and personal) credit score. So make sure you follow our guide to build up your business credit score here.
So, what if your personal credit is not great? There are still a few card options out there that will offer you a credit card even if you have a lower credit score. For example, Capital One often offers credit cards to businesses with owners who have lower credit scores. An alternate option to the Capital One card would be to use a secured credit card. A secured credit card basically means that you pay an upfront deposit to offset the companies potential loss once you rack up a balance on your credit card. These cards are great because they do not check your credit score and can also help you to build credit over time.
Which Card Should You Choose?
Now that you know how to go about getting a business credit card, how do you choose which business credit card is the right one for your business? When considering your credit card options, there are a few key things to keep in mind:
- APR: What is the Annual Percentage Rate for the card? This is the amount of interest that you will pay in a year if there is a balance on your credit card. There are many companies that offer 0% APR for the first year, but it is still important to see what the APR will be in the years to come. The Blue Business Cash card from American Express is an excellent choice with 0% APR for the first year.
- Rewards: Most credit cards come with rewards. The most important thing for you to consider is which rewards are the most beneficial for your business. Rewards options range from points, miles, and cash back. Depending on how often you travel or shop at certain stores, different rewards options may or may not be right for you.
- Foreign Transaction Fee: This is really only important if you are going to be traveling internationally with your business. Many credit card companies charge interest on purchases made while abroad. If you are going to be traveling internationally often, we recommend investigating which companies offer the lowest foreign transaction fee, or which companies allow you to make foreign purchases with no additional fee.
Ultimately, finding the right card for your business is something that takes time and research. Every business is different and will have different priorities when it comes to getting a business credit card. If you’re finding it difficult to choose between cards, check out this comprehensive list of credit cards for businesses.
Tips From the Pros
Even if you’ve chosen your credit card, applied, and been approved, you might still have a few lingering questions about having a business credit card. A few common questions that first-time business credit card holders want to know are:
- If I have a business credit card and am a sole proprietor, can I use this card for personal expenses too?
- As we mentioned at the beginning of this guide, one of the perks of having a business credit card is that it helps you to keep you personal and business expenses separate from one another. Therefore, it is advisable to keep your business card and personal expenses separate and not use your business credit card on personal expenses.
- My business isn’t making money yet, can I still apply for a business credit card?
- Absolutely! If you have the intention of making a profit from your business and have a plan in place, you can still apply for a credit card. Do keep in mind, however, that you will have to pay off the credit card one way or another, regardless of how your business is doing.
- Do I need to have a business checking account to apply for a business credit card?
- If you are working as an LLC, partnership, or corporation it is recommended that you keep a separate checking account for your business.
- If my personal credit can affect my business credit card, can my business credit card affect my personal credit?
- Generally speaking, no. More often than not, business credit cards do not report to the personal credit bureaus. However, if you are continually late on making payments, then your personal credit could suffer.
Other Perks of Having a Business Credit Card
Now that you have chosen, applied for your business credit card, and been approved for your card, it’s time to start enjoying all of the perks of having a business credit card. Not only is having a business credit card incredibly helpful when it comes to establishing the financial viability of your company but as we’ve mentioned a few times, the primary perk to having a business credit card is the ability to keep your personal expenses and your business expenses separate. This will be immensely helpful when it comes to doing your taxes (both professionally and personally) and will also help you to keep better track of your money and spending altogether.
Keeping your personal and business expenses separate can also be helpful were your company to ever run into any legal trouble. Having your finances separate creates a layer of space between you and your company.
Another great perk to having a business credit card is that you’ll be able to begin building your business credit. This can help to establish your ability to take out a loan, among other things, as a business.
Having a business credit card is also incredibly helpful when it comes to having working capital. This can take your business to another level when it comes to hiring graphic designers for marketing and purchasing inventory, for example.
And finally, just like with personal credit cards, business credit cards come with many great perks for cardholders like points, miles, and cash back.
All in all, having a business credit card can not only help protect you and your business legally, but it can also help your business to grow with working capital and an established credit score. Having a business credit card helps your business to go from a small owned business to a business that other business (and potential customers) take more seriously.
If you’re still on the fence about whether or not you should get a business credit card, we humbly believe that a business credit card can provide amazing benefits and should be at the top of your priority list when it comes to finalizing your business accounts and setting your business up for success.