Over the years, I’ve written almost exclusively about consumer credit cards. Yet, there’s a whole other type of card I’ve rarely brought up: business credit cards. The reason why I haven’t given much attention to these cards is the simple fact that they don’t apply to most people. However, if you’re self-employed like I am, you may be surprised to learn that you may indeed be eligible for business credit cards (since you’re technically a sole proprietor).
So, why would self-employed individuals even want business credit cards? And what’s the process of applying for a card as a sole proprietor? Let’s answer those questions and take a look at my personal experience opening my first business credit card.
Why Self-Employed Workers Might Want a Business Credit Card
Separating Purchases
Perhaps the most obvious reason why self-employed individuals should consider business credit cards is that they can easily separate their business purchases from personal ones. Although I’ve previously used tools such as QuickBooks to sort my business expenses from regular purchases, there’s no doubt that having a dedicated card makes things easier (plus, with the rising cost of QuickBooks, I’m not currently using the service).
Obviously, tracking your business purchases as a self-employed worker is crucial, as these expenses may be deducted from your taxable income. Therefore, to simplify your tax season, it may make sense to pick up a business credit card and use it strictly for these eligible purchases.
May Not Show on Personal Credit Report
Another benefit of business credit cards is that, while your personal credit may be a factor in getting approved, your business account may not impact your credit afterward. That’s helpful because it means you can utilize a greater portion of your credit limit without worrying about your credit scores. Additionally, in the case of issuers that may be uptight about the number of cards you have open (namely Chase), opening business credit cards can be a workaround.
To be clear, while this is true of most business cards, it may not be the case across the board. Because of this, if you are concerned about a business credit card showing on your credit report, you’ll likely want to do some research and look for data points as to what the card’s issuer’s policies are.
Additional Rewards (and Bonuses)
Of course, one great reason to consider business credit cards is that you increase your access to rewards, perks, and more. Plus, you’ll have more opportunities to claim the most lucrative part of credit cards: welcome bonuses. That said, be aware that business credit cards do tend to have larger minimum spending requirements than some consumer cards — although that can also mean larger bonuses.
As for rewards, you can find flat-rate business credit cards (such as 2% back on everything) as well as those that include multipliers for common spending categories like travel and dining. On top of that, many cards feature business-centric spending categories. Some examples may include advertising spending, shipping, office store purchases, and more. Therefore, if one of these categories represents a big part of your business spending, you’ll want to seek out cards that offer enhanced rewards on them.
Popular Business Credit Card Options
If you’re looking for a credit card, there are a few well-known lines of business credit options. At Chase, you’ll find several Ink Business cards, including Ink Business Premier, Ink Business Unlimited, Ink Business Preferred, and more. Meanwhile, Capital One has a line of Spark cards with varying rewards and features. As for those who prefer a co-branded option from their favorite airline or hotel, many loyalty programs offer business cards of their own.
There are also business versions of several notable credit cards. These include the American Express Business Platinum card, the Capital One Venture X Business, and the newly-launched Chase Sapphire Reserve for Business card, among others. In most cases, these cards will strongly resemble their consumer counterparts, but also include a few business-centric tweaks. So, if you’ve been eyeing any of these consumer edition cards, it may be worth looking to see if the business versions may make sense instead.
My Experience Applying for a Business Credit Card
The Card I Choose
After looking around at options, I landed on the IHG Business Premier card as my first business credit card. That might seem random given the long list of higher-profile picks, but I had a few reasons.
First, I found the card’s $99 annual fee to be reasonable. Second, at the time that I applied, the card was offering a solid welcome bonus worth up to 200,000 points. Moreover, while the first part of that bonus required $4,000 in spending within the first three months, the “stretch goal” portion gave me six months to reach the total of $9,000 in spending. And although $9,000 is a lot of money, this minimum spending limit is still below what was needed for several other business credit card bonuses.
Another reason why I chose the IHG Business Premier is that it offered decent multipliers in categories I’d expect to use for business. Namely, I appreciated that it earned 5x points on travel and dining. Of course, I can earn even greater points at IHG properties, but I like that it has a generic travel category as well.
Finally, going back to the annual fee, the annual Anniversary Free Night worth up to 40,000 points could help offset that $99 a year. That plus other perks of the card (such as IHG Platinum status) made it a solid pick for me, even if I’m not an IHG loyalist by any means.
Application Information
Applying for my business credit card started off like any other credit card application. But, as you’d expect, there was a bit more to do.
First, the application asked about my business structure. For most self-employed people, the answer is “sole proprietorship” — which is what I selected. Next, I had to enter business details such as the name of the business (and the business name I wanted displayed on the card) and the number of employees. It then asked about my Business Tax ID type and allowed me to simply select my Social Security number.
After that, the app asked when my business was established, how much revenue it makes per year, and my estimated monthly spend. It also asked me to select a category for my particular business. As a writer, I first had to select Arts, Entertainment, and Recreation, followed by Independent Artists, Writers, and Performers as a sub-category.
Once I answered those questions, I was ready to submit my application.
Approval
A minute or two after timidly hitting the “submit” button, I learned that I had been approved for the card! However, while I was excited to be approved, my credit limit was relatively low at just $5,000. I’m not sure if this was because my business doesn’t make a ton of money on paper or because my personal credit is filled with several other cards. For what it’s worth, I applied for a consumer Capital One Venture card not too long after and saw a similar result. Regardless, even if $5,000 is low overall, it’s enough for what I currently need.
My Credit Report
Another reason why I’m not too concerned about the lower credit limit is that, as expected, the card doesn’t show up on my personal credit report. Therefore, I don’t need to worry about my credit utilization hurting my scores. So, while I haven’t exactly maxed out my card yet, I have gotten closer to doing so (especially while striving for that welcome bonus) than I would with a consumer card.
As I’ve learned over the years, there are several great aspects of being self-employed. Now, you can add the ability to apply for business credit cards to that list! While they might not make sense for everyone, there are some advantages, ranging from bookkeeping ease to bonus rewards. So, if you’re self-employed, it may be worth exploring business credit card options and seeing what makes sense for you.
