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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.