Everyone Can Qualify For Business Cards
Some of the best credit card welcome offers are found on business cards and they should be everyone’s go to when applying for new cards. Don’t currently have a business? Thats okay! Keep reading along to understand how business cards work.
I do not have a business.
Ever sell anything on Facebook Marketplace, eBay or in a yard sale? Great, you have a business! You do not need to have a registered business to apply for a business credit card! Furthermore, you do not need to only have business expenses on a business credit card. The bank does not care what the purchase is intended for and you can make personal purchases on the card.
Why should I even want a business card?
Business cards have much higher welcome bonuses! This means you get more rewards for a single credit check. On top of this, business credit cards don’t show up on your personal credit report unless they are in bad standing. This alone is helpful when you are planning on closing your credit card after a year or two, as it will not impact your long term credit score or history.
Additionally, American Express does not do a credit check if you currently have an open account in good standing. This means you can open additional accounts without it impacting the number of credit checks on your credit report! While you can do this with personal American Express cards, the business line of credit cards increases the number of possibilities!
Likewise, once you have been doing this hobby for a while, you will run out of card options if you are only considering personal credit cards. Applying for business credit cards increases your options.
Business cards have higher referral bonuses. If you are doing 2-player mode, then this will increase the amount of rewards earned over only applying for personal cards!
Lastly, business cards can have some good additional perks that personal credit cards might be lacking. While every card is different, consider this when comparing your next personal or business credit card.
What is a qualifying business?
For business credit card purposes, any business structure qualifies when applying. This means you do not even have to register a business since you can use your SSN for the Tax ID and select Sole Proprietor.
What tax implications does this have?
While I am not an investment advisor, financial planner, nor legal professional, my experience has told me that legally you only need to report income for your business. By using a business credit card, it does not require you to report anything to the IRS when submitting your tax return. So just because you sold something once upon a time on Facebook market place, it does not mean you are expected to continue to make income that needs to be reported.
Doesn’t the bank require proof of the business or income/expenses?
Yes, to a degree. The bank will use your own credit score as well as any existing business credit score to determine if your application is accepted, and the spending limit that is given. If your business has no credit score then they will often times ask for proof that it exists. When applying as a sole proprietor this is different since it is only your own SSN that is being used. If you are applying as a LLC then they will need the Tax ID number (TIN) during the application, they will then ask for verification of this. When you apply for a TIN from the IRS, you are given a confirmation document and this is sufficient to provide to the bank.
The bank does not care to verify income/expenses as they use your own credit score and income to determine the spending limit.
What if I actually have a business?
If you actually have a business then great! You can use your existing business information when applying for the business credit card. It comes down to how you do your bookkeeping, but as mentioned before you do not need to only keep business purchases to the business card. It is important to keep good financial records for what is a business vs personal purchase and make sure your bookkeeping is kept up-to-date and contains purely related business expenses.
Meeting the increased minimum spend requirement.
While the welcome bonus is usually higher on business cards, so is the minimum spend requirement. Before applying for a business card, make sure you can meet the minimum spend requirement. I would recommend testing your spend ability with a lower requirement card to get a baseline of what you can comfortably meet.
If a spend requirement is just out of reach, wait until you have an upcoming planned big purchase to help you reach it. This might be new furniture, car or home maintenance costs, or a vacation. Be mindful of these future expenses and time them to when you are opening a new credit card to maximize the spend!
Some of my favorite business cards!
Here are some of my favorite business cards for you are ready to apply for your first business card.
Chase Ink Business Preferred
Chase Ink Business Unlimited
Chase Ink Business Cash
The Business Platinum Card® by American Express
American Express® Business Gold Card
The Blue Business® Plus Credit Card from American Express