9 reasons to get a business credit card

Many business credit cards offer rewards and benefits that are just as great, if not better, than those offered by personal credit cards.

Plus, business cards often have huge sign-up bonuses and unique category spending bonuses, among other perks.

However, some people might hesitate to apply for a business credit card, even if they’re eligible to do so. In case you didn’t realize, you don’t need to own a formal brick-and-mortar business to be approved for a business card.

Whether you’re a freelancer or starting a new side hustle, there are plenty of great reasons to add a business credit card to your wallet.

Here are some of the most compelling.

You don’t need a large business to get a business card

You may think you need an incorporated business with its own tax ID number or employee identification number to apply for a business credit card, but that’s just not the case. In fact, you might be eligible for a business credit card without even knowing it.

While you should aim to use your business credit card for work-related expenses, each credit card issuer has different requirements to get a small-business card.

Some issuers, such as American Express, are very flexible. On the other hand, Chase is generally the toughest, often requiring proof of your business, including government employer identification number (EIN) and business checking account information.

However, many small businesses start as simple DBAs (doing business as), which denotes a business name used by a person or entity different from the person’s or entity’s true name.

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For example, let’s say you start a small eBay business and want to keep your finances separate from your personal expenses. In this case, you might consider a small-business credit card.

If you’re starting a small company as a sole proprietorship, you can provide your Social Security number when asked for an EIN, which will usually suffice. In most cases, you don’t need any paperwork to form a sole proprietorship; you become one by simply doing business.

Related: What name should I put on my business credit card application?

Business credit card applicants typically experience a two-to-five-point hit on their personal credit scores upon applying since banks generally use your personal credit report to assess your creditworthiness. This is because these cards are still usually personally guaranteed.

However, other than this initial credit inquiry, the business line of credit sits separately from your personal credit line, so your utilization ratio and other factors shouldn’t affect your personal credit score.

That’s good news if you put big balances on your business cards since it won’t damage your personal credit score. Be careful, though, because if you default on a business credit card, the issuer can come after your personal assets since your personal credit guarantees those cards.

Plus, you can apply for a business card from most issuers without affecting your 5/24 status with Chase since the new account won’t show up on your personal credit report.

Related: How a business credit card could help your personal credit scores

Keeping expenses separate

It’s easy to charge all of your expenses, both personal and business, on the same credit card for convenience.

Still, keeping your personal expenditures separate from your business ones is important — especially during tax season. Having a separate business credit card makes tracking expenses easy, and you’ll pay less in accounting fees if your accountant doesn’t have to sort through personal versus business expenses.

Plus, it’s easier to get everything straightened out if you ever get audited by the IRS.

As a bonus, many business credit cards make it easy to export your transaction history to QuickBooks or other accounting software.

Related: Can you pay taxes with a credit card?

For instance, you might already have scored the welcome bonuses on the Chase Sapphire Preferred® Card or the Chase Sapphire Reserve®. To keep racking up Ultimate Rewards points, you might want to consider the Ink Business Preferred® Credit Card, for example, which is currently offering 90,000 bonus points after spending $8,000 on purchases in the first three months from account opening.

A good place to start is to look at the cards you currently carry and see if any of them have business counterparts that might be good options for your budget and spending habits.

Maximize different bonus-earning categories

While you’ll find many business cards with travel or dining bonus categories that overlap with personal credit cards, you’ll also find many unique categories clearly geared at businesses and not consumers.

For example, the American Express® Business Gold Card — with an annual fee of $375 (see rates and fees) — accrues 4 points per dollar in the two categories you spend the most in each billing cycle from the following list, on the first $150,000 in combined purchases each calendar year (then 1 point per dollar thereafter):

• Purchases at U.S. media providers for advertising in select media (online, TV, radio)
• U.S. purchases made from electronic goods retailers and software and cloud system providers
• U.S. purchases at restaurants, including takeout and delivery
• U.S. purchases at gas stations
• Transit purchases, including trains, taxicabs, ride-hailing services, ferries, tolls, parking, buses and subways
• Monthly wireless telephone service charges made directly from a wireless telephone service provider in the U.S.

There’s also the Ink Business Preferred Credit Card, which earns 3 points per dollar on your first $150,000 in combined purchases (then 1 point per dollar thereafter) each account anniversary year in the following categories:

• Travel
• Shipping purchases
• Internet, cable and phone services
• Advertising purchases made with social media sites and search engines

Many of these categories don’t overlap with those of personal cards, making business cards great for maximizing your earnings.

Business perks

Business owners often have different needs than consumers. Many issuers offer some form of transaction or expense management on business credit cards to help keep you organized, and some even offer free employee cards, which can help you rack up rewards even faster.

You’ll also find several cards with great purchase protection, extended warranties, and cellphone protection, so your business won’t be financially responsible if you buy expensive products that are lost or damaged.

Although many banks decide how many credit cards you can have based on your overall credit line limit, some banks limit the number of cards you can open. For example, you can typically only have five cards with Amex at any given time.

However, the limit for cards like The Business Platinum Card® from American Express is separate, which means you can expand your company’s buying power and rack up some great introductory offers simultaneously.

Establishing a business credit history

This one goes hand in hand with the fact that your business credit card’s line of credit doesn’t sit on your personal report.

While you hopefully have a high personal FICO score when you apply for a business card, once that card is open, its entire record sits separately from your personal credit.

However, if your business takes off and you end up applying for financing (for equipment purchases, real estate or other large expenses), banks will look at your business credit history when determining your interest rate, and the more established your line of credit, the better rates you’re likely to get.

Related: 10 considerations for your small-business credit card strategy

Related: These business cards can help you stay under Chase’s 5/24 rule

For rates and fees of the Amex Business Gold, click here.