Key takeaways
- It is possible to get a business credit card without owning a business if you earn money independently, such as through freelance writing or driving for rideshare apps.
- On your business card application, you can typically list yourself as the sole proprietor in the business tax identification section — using your Social Security number rather than a tax ID number.
- Some card applications may require you to mail in additional documents for approval, such as income information.
Business credit cards offer some unique perks you can’t always get with personal credit cards, including bigger sign-up bonuses and specialized rewards categories. But are you eligible to get a business card if you work for yourself as an independent contractor, freelancer or if you have an occasional side hustle?
In most cases, the answer is “yes.” To be approved for a business credit card, you just need to be earning some money independently. Here’s what you need to know about applying for a business credit card when you don’t have a traditional business.
Who can get a business credit card without a business?
You may be more of an entrepreneur than you think. Any income-producing endeavor can be considered a legitimate business for a business credit card.
A few examples of common nontraditional business ventures include:
- Running a dog-walking business in your neighborhood
- Buying and selling on eBay
- Working as a virtual assistant
- Driving for ridesharing apps like Uber or Lyft
- Owning and leasing rental properties
- Delivering food with app-based companies like DoorDash or Grubhub
- Tutoring kids in person or online
- Buying and selling antiques
- Independent consulting work
- Selling homemade items at markets or online (such as on Etsy or Facebook Marketplace)
- Working as an entertainer
- Freelance writing and editing
- Building websites
- Managing social media sites
In short, if you earn money from the work you do, you may be able to qualify for a business credit card. You don’t have to have a registered LLC or corporation to apply for a business credit card. If on the credit card application you come across a section asking for your “business tax identification number,” you can list yourself as the sole proprietor and enter your Social Security number instead of a tax ID number.
Business credit card requirements
If you have a registered business, including an LLC, you’ll apply for a new business credit card using your business information. This includes using your Federal tax ID number, also called an Employer Identification Number (EIN). If you run your business without a formal business setup, you can simply apply as a sole proprietor with your Social Security number instead.
What information will you need to apply for a business credit card?
Prepare to submit the following information when applying for a business credit card*:
- The legal name of your business and the business name you want listed on the card (this may just be your name if you’re a sole proprietor)
- Your annual business income
- Monthly business expenses
- The age of your business since inception
- The industry your business is in
- The business structure (LLC vs. corporation vs. sole proprietorship, for instance)
- Your role in the company
- How many employees you have (if any)
- Your business address, even if it’s your home address
- Your business phone number, even if it’s your personal phone
*Note that not all of this information may be required by the credit card issuer at the time of application.
Depending on the card, you may have to mail in supporting documents to prove you have a business. This may include information from the Internal Revenue Service that proves your EIN or income information. In most circumstances, though, you’ll receive notice of approval within a few seconds of applying online.
Can you get a business card without business income?
Yes, you can get a business card if your business hasn’t yet generated any income. Issuers understand that new businesses may not have business income yet, so be honest if you’re just starting out and haven’t generated income. That said, even if your income seems small – you’ve only sold a few hundred dollars worth of goods, for instance – you should list that income on your application.
Remember, getting approved for a business credit card may not be as difficult as it seems. Many activities can be considered a small business. If you regularly perform services or sell items for a profit and can prove that you have both sales and expenses, you may be able to qualify for a business credit card. Small businesses can include anything from running an active Etsy store to driving for rideshare companies.
Top reasons to get a business credit card
There are a variety of reasons to obtain a business credit card for your business, including the following:
Rewards on business expenses
Chances are you have some business-related expenses you could be earning travel rewards or cash back on. For example, as a rideshare or delivery driver, you may need to cover your own gas as well as pay for the maintenance and repairs on your vehicle. If you’re selling crafts or artwork, you’ll probably need to purchase supplies.
Whatever your costs are, you can earn cash, points or miles if the card has a rewards program. If the account offers a welcome bonus to new cardholders, you may be able to earn additional rewards by meeting a minimum spending requirement within the first few months of account opening.
Keep personal and business spending separate
Maintaining separate business and personal credit cards can help you stay organized. Not only will you have a better handle on your spending, but having all of your expenses on the business credit card will help when you have to reconcile your books and pay your taxes.
Build your business credit score
While your personal credit score is considered when you apply for a business credit card, you create a business credit history when your credit issuer furnishes data to the three major commercial credit bureaus — Dun & Bradstreet, Equifax and Experian.
By keeping your accounts in good standing, your business credit score will improve over time, increasing your eligibility for other business credit products in the future.
Business perks
Many of the top business credit cards offer specialized perks, such as cellphone insurance and cash credits for business-related products and services. It pays to get the right card for your enterprise.
Can you use a business credit card for personal expenses?
Using a business credit card for personal expenditures isn’t against the law; however, doing so may violate the terms in your card agreement, which could result in penalties. These repercussions might include:
- Closure of your account: You’ll likely have to sign an agreement vowing not to use your business credit card for personal charges. The agreement may stipulate that if you violate these terms, the issuer can choose to cancel your card.
- Personal liability: Blending your personal and business finances may result in you assuming personal responsibility for any business debts in the event of legal complications. It could enable courts to disregard the separation between you and your business, potentially holding you personally accountable for your business’s obligations.
- Tax consequences: Typically, business credit cards entail elevated fees and interest rates compared to personal cards. But these higher costs often come with a benefit: most interest charges and fees accrued from business transactions are tax-deductible, alongside the business-related expenses. Conversely, personal purchases lack this tax-deductible advantage, resulting in no financial return. So, if you utilize your business credit card for personal expenses and carry a balance, it will likely incur greater long-term costs.
- Effects on both business and personal credit scores: Using your business credit card for personal transactions in hopes of enhancing your consumer credit score might be enticing, but it’s unlikely to be helpful. Most business credit cards only report positive card activity to business credit bureaus, meaning any responsible habits with your business credit card is unlikely to reflect in your consumer credit score. However, issuers do sometimes report negative business card activity to personal credit bureaus, so your personal credit score could be adversely affected.
- Limited consumer protections: Using a business credit card instead of a personal one could result in the loss of specific legal protections you enjoy when you use a consumer card — including safeguards against sudden interest rate hikes without prior notice, prohibition of interest rate increases on outstanding balances, prohibition of interest charges on timely paid debts and allocation of payments toward balances with the highest interest rates first.
If you mistakenly charge a personal expense to your business card, notify your accountant or bookkeeper and mark the transaction to exclude it from your business’s financial records.
What to look out for in a business credit card
Although business credit cards provide plenty of advantages, there are a few potential downsides. Often, the business credit cards with the most perks charge high annual fees. For example, The Business Platinum Card® from American Express comes with a hefty $695 annual fee. But if you’re unsure how often you’ll be charging purchases to your card or whether you’ll really use the perks, consider a business credit card with no annual fee.
Before applying for a card, consider the pros and cons of several of the best business credit cards so you can decide which best meets the needs of your unique business — whether your work involves road trips, creative work, e-commerce, air travel or something else.
Of course, every card you get must be handled properly, and management takes time and attention. Regardless of the size of your business, it’s best to maintain a low balance so fees don’t eat into your proceeds and always pay your monthly bill on time to protect your business credit rating.
FAQs
The bottom line
Business credit cards can offer business owners more perks and better rewards on business-related expenses. They also tend to offer higher welcome bonuses and can help your business build its own credit score. Most importantly, using a business credit card for legitimate business expenses makes it easier for you to separate your business and personal finances.
Although you’ll need to have a legitimate business to be approved, getting a business credit card may not be as difficult as it seems. Many small business ideas and side hustles allow you to qualify for a business credit card.
With so many benefits and perks, business credit cards can be just what you need to manage your costs while making your work life easier and more profitable. Whether your business is a casual, part-time gig or a full-time freelance profession, choosing the right business credit card will help you stay on track and get ahead.
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