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There are many benefits to having a business credit card. Besides the generous sign up bonuses, having a business card allows you separate business and personal expenses. If you don’t have a business, don’t worry, there are still some ways you can get approved for a business credit card.
3 ways which may qualify you for a business credit card:
1) Existing Business
You own an existing business. For example, you are Joey Boombatz and you own a food truck.
This way is simple. You type your business information in the credit card application and submit. Done.
2) Business Start-Up
In my personal and client’s experiences, you can have a new business and apply for a business credit card as a business start-up.
You could be starting a new business venture and wanting to apply for a business credit card in order to keep your business expenses separate from your personal expenses.
Starting up a business is a legitimate reason to want a business credit card.
The most important part of the application is to be honest and tell the truth.
With that being said, if you applied for a new business card and they require you to get on the phone, you can explain that you are embarking on a business start-up venture.
Well, you might be wondering what qualifies as a potential start-up. Here are some potential situations:
- Do you sell books or other items for profit on e-bay, Amazon, or Etsy?
- Do you get paid to train, coach, teach lessons, baby-sitting/nanny, or do household repairs for others?
- Have you started buying and selling items for profit?
- Do you sell homemade baked goods or crafts for profit?
- Do you get a payment for referring anyone to a certain product?
Take a minute to think about your personal situation.
Start-up business are riskier to lenders (Only 50% survive after four years) than established businesses, so there is less of a chance to get approved because of how strict banks are with start-up businesses. If approved, the banks will usually assign a lower than average credit line to business credit cards which are for start-ups.
3) You are already in business
Many of us may be involved in business activities that aren’t yet profitable.
For example:
- If you buy and sell goods (books, gift cards, DVDs etc) online for profit
- If you sell items from your home (Garage sales, Craigslist,etc.)
- If you have a booth at a flea market and regularly sell items.
Keep in mind, you don’t have to be an incorporated or registered company to engage in business activities. You can apply for a business credit card as a sole proprietor using your Social Security Number instead of a tax ID number.
Check Out Some Of The Best Business Credit Card Offers On My Credit Card Page
Ready To Apply As A Sole Proprietor?
A sole proprietor is a person who owns and runs a business him or herself.
In a sole proprietorship, the business and the individual are considered to be the same. However, being a sole proprietor carries more risks and makes you personally liable for the business debts and for paying taxes on your business income.
When you apply for a business credit card as a sole proprietor, banks pull your personal credit score, assess your personal income, and use the information on your application in order to make a decision to approve your credit card. The reason they assess your personal information for a business credit card application is because as a sole proprietor, you are liable for your business debts.
The good news is that if you have a good credit score and sufficient income, you can be approved for a business card as a sole proprietor.
As a sole proprietor, your business may be in your name, “Joey Boombatz” or in a trade name (also called “Doing Business As” or DBA), for example “Joey’s Food Truck”
How to fill out a business credit card application as a sole proprietor
The business credit card application has the common section for personal information, After the personal information section, the application requires business information.
1) Legal Name of Business: If you are a sole proprietor, your legal business name could be your own name, “Joey Boombatz” or the name of your business (trade name or DBA), for example, “Joey’s Food Truck.”
Its possible that you may be asked to verify your business name later on in the application proccess. To prepare for that possibility, it may be better to have the legal name of your business be the same name which appears on your utility bill or bank account statement.
2) Years in Business: For example, if you have been thinking of selling homemade soap for the last year and have been buying ingredients to test different recipes enter “1.”
3) Name of Business for Card: This will be the name printed on the credit card. If your name isn’t registered with the state, put your legal name which appears on your utility bill or bank statement.
4) Is your business address the same as your home address?: If you’ve been selling soap out of your house, enter “Yes.”
5) Business Phone Number: If the headquarters of “Sally’s Soaps” is in your house, then enter your home telephone number.
6) Number of Employees: You have at least 1 employee (yourself) if you are a sole proprietor, so select the “1-5” option if you are the only employee of “Sally’s Soaps.”
7) Line of Business: For example, enter “Service” if you sell books or DVDs.
8) Occupation: Enter “Sally’s Soaps” full time occupation.
9) Annual Revenue: Enter the total amount you receive annually for selling your home-made soaps. It is important to fill out all information honestly in every credit card applications. It is much better to say that you have no annual sales than to enter a fictitious amount.
10) Does your business have a Tax Identification Number?: Choose the option which says “No, my business is a sole proprietorship.”
Remember that a sole proprietorship is indistinguishable from the owner and the owner has to pay taxes for the business in his or her own personal income tax return.
Since you don’t have a Tax ID Number as a sole propiteor, you would put your social security number instead.
Additional Verification:
After you submit your application, you may be asked to provide verification of your business.
This may be in the form of copies of your business bank account, utility bill, tax returns, business license etc.
Opening up business credit cards opens the door to more opportunities to earn miles and points. The more miles and points, the more chrap travel you get.
Have you opened up any business credit cards?
Yes, I recently got approved for the chase ink card. Working on the minimum spending to get my 80k.
I looked into getting a business card and noticed that it specified that my spending had to be for business expenses and not personal expenses. As my business (a blog) doesn’t have many expenses, I didn’t see any way to meet the minimum spend requirement. Am I thinking too narrowly about my expenses?