What is the best business credit card?07/15/2019
Most major businesses have their own business credit cards. But if you have just started a business and are managing it yourself, you may wonder if looking for a business credit card online would be helpful for your business.
Business credit cards are not just for booming corporations – they can be incredibly helpful for start-up businesses and entrepreneurs alike. First, owning a business credit card allows you to invest in the company or make company purchases without being dependent on cold hard cash in your pocket. For a small business, this can help push growth and marketing, especially in the beginning stages when the business spending is limited by when the paycheck arrives. That doesn't mean you should go wild and blow the budget wide open, but it does mean that investment options are open to you should the opportunity arrive.
Second, owning a business credit card will help organize the finances. Managing the finances of any company is well-hated aspect of business, and especially when starting out, keeping the spending records straight can be very difficult. There are programs for most credit cards online for tracking expenses. A business credit card will keep the business expenses separate from your personal expenses and will make it easier to review your finances as a whole. No more saving receipts from every time you bought a company mousepad!
Additionally, a business credit card offers more perks than a personal credit card. Many have online tracking features, which can be helpful for tax season, quarterly statements, or audits, and most business credit cards offer higher credit limits, cash back rewards and lower annual fees. Some options will even let you earn reward points on money over your spending limit, with no fee or zero interest.
Business card requirements
Requirements for a business credit card will vary according to issuer, just like any other card: for example, Visa will have different requirements than MasterCard. In the end though, the banks issuing them will be more important than the issuer. You will need the business legal name, your tax identification number, the business type, structure, and industry, the number of employees, the business address and phone number, your role in the business as well as how long you've been involved and most importantly, the estimated annual business revenue and monthly spend. Visa and MasterCard are both a widely accepted network: so when choosing a business credit card pick whatever will be best for the company. To qualify for a business credit card, you must be…you guess it, a business. How you define that term is actually pretty flexible. You must be for-profit and must have an income from selling a product or performing a service. If your service or product offers a 1099 form for it, it probably counts.
Banks will look at your personal income and credit score before approving your business card application. You don't have to have a personal credit card to qualify for a business credit card but since you are backing your start-up business personally, the better your credit score is the better your odds for a business credit card. You also don't necessarily need to have a business income yet; but you should give the bank as accurate a guess as possible.
How to get approved for a business credit card?
Getting approved for a business credit card is not always a guarantee. The best thing that you can do is be honest. If you have a poor credit score and you are denied by the bank, then you can wait and build up your income and credit score and then try again. But if you lie about your income or expected revenue on the application form and the bank decides to give you a full financial investigation, then your business and personal credit scores will plummet, and more issues with the IRS can arise later.
Can I get a business card without a business?
Many free-lancers are now opting for a business credit card instead of personal credit cards. This seems to directly contradict the first requirement for owning a business credit card – owning a business. And it does, at least in the traditional sense of a 9-to-5, cubicle-filled desk job. While it depends on the card issuer, most business credit cards don't care if you run an incorporation or not: simply selling things on eBay counts as a business. And while the beginning application for a business card weighs in your personal credit score, the business credit score does not affect your personal score once it is activated. In fact, it is recommended to get a business credit card immediately after starting the business to build a credit score for the company; be aware and in control of payments, however, since missed payments will mean penalties on your personal account (since your personal account is backing it).
When "shopping" for your business credit card, be aware of which card will best help your business. Your small business may benefit more from one card than a bigger company; remember the differences between Visa and MasterCard? One may have the zero interest or no fee on overdrawing, or another might have both. Choose whichever is best for you!