9 reasons to get a business credit card

Sep 13, 2019

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Many of the credit cards currently on the market that are geared toward businesses carry rewards and benefits that are just as great — and sometimes better — than the personal credit cards that are out there, including huge sign-up bonuses, category spending bonuses and tons of other perks. However, many people seem hesitant to apply for them, or might not realize they’re eligible. Today, we’re going to look at the top reasons why you should consider adding a business credit card to your wallet.

You don’t need a large business to get one

This seems to trip up a lot of people who think that you need an incorporated business with its own tax ID number or employee identification number (EIN) in order to apply for a business credit card. While you should aim to use your business credit card for business-related expenses, each credit card company has a different threshold for what information it requires for someone to get a business card.

Some, like Amex, are very flexible. Chase is generally the toughest, often requiring proof of your business, including government EIN and business checking account information. However, many small businesses start out as simple DBAs (Doing Business As), which simply denotes a business name used by a person or entity that is different from the person’s or entity’s true name. So if you start a small eBay business and want to keep those finances separate from your personal expenses, it would be conceivable that you’d want a business credit card.

(Image courtesy of The Points Guy)

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

Business credit cards don’t sit on your personal report

I want to start by clarifying that you do get a two- to five-point hit on your personal credit score when you apply for a business credit card, since banks use your personal credit report to assess your creditworthiness and these cards are still 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.

This is good if you run big balances on your business cards, since it won’t damage your personal credit score. Just be careful, because if you default on a business credit card, the issuer can come after you personally since those cards are guaranteed by your personal credit.

The other bonus is that you can apply from business card from most issuers without it affecting your 5/24 status with Chase, since the new account won’t show up on your personal credit report.

Keeping expenses separate

It’s easy to shove all of your expenses,  both personal and business, onto the same credit card for convenience’s sake, but it’s important to keep your personal expenditures separate from your business ones — especially when tax season draws nigh. 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 an added bonus, many business credit cards make it easy to export your transaction history to Quickbooks or other accounting software.

Double-dip on welcome bonuses

Applying for business credit cards allows you to go for a whole new set of bonuses. Though you’ll have an extra inquiry on your credit report, you’ll also be eligible for bonuses like the Ink Business Preferred Credit Card’s 100,000 bonus points after you spend $15,000 on purchases in the first 3 months, the highest of any Chase card at the moment, or the limited-time offer on the Business Platinum Card® from American Express, which offers 75,000 bonus points after you spend $15,000 on qualifying purchases within your first 3 months of Card Membership.
(Photo by Isabelle Raphael/The Points Guy)
(Photo by Isabelle Raphael/The Points Guy)

If you already got the bonus on the Citi® / AAdvantage® Platinum Select® World Elite Mastercard®, you could also go after the CitiBusiness® / AAdvantage® Platinum Select® Mastercard®. If you’re in the market for new business credit cards, you can check out our list of top current offers.

The information for the Citi AAdvantage Platinum card and CitiBusiness AAdvantage Platinum card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Access different bonus categories

While you’ll find many business cards offering travel or dining bonus categories that overlap with personal credit cards, you’ll also find a lot of unique categories clearly geared at businesses and not consumers. Take the American Express® Business Gold Card, which offers 4x in the two categories you spend the most in each month from the following list, on the first $150,000 in combined purchases each calendar year (then 1x):
  • Airfare purchased from airlines
  • U.S. purchases for advertising in select media
  • U.S. purchases for shipping
  • U.S. purchases at gas stations
  • U.S. purchases at restaurants
  • U.S. purchases made from select technology providers

You also have the Ink Business Preferred Card, which offers 3x on your first $150,000 in combined purchases (then 1x) in the following categories:

  • Travel, including airfare, hotels, rental cards, train tickets and taxis
  • Shipping purchases
  • Internet, cable and phone services
  • Advertising purchases made with social media sites and search engines

Business perks

Simply put, business owners have different needs than consumers do. Many banks 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 a number of cards with great purchase protection and return protection, so your business won’t be financially responsible if you buy expensive products that are lost or damaged.

(Photo by Isabelle Raphael/The Points Guy)
(Photo by Isabelle Raphael/The Points Guy)

More cards

Although many banks decide how many credit cards you can have based on your overall credit line limit, some banks have limits on the number of cards you can have. For example, you can only have five credit cards with Amex. However, the limit for charge cards such as the Amex Business Platinum is separate, allowing you to double-dip once again. Not only does this let you get more cards (read: more welcome bonuses) but Amex charge cards can also be a great tool for high-spending businesses, as they don’t come with a preset spending limit.

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 the card in the first place, once that card is open, its entire record sits separate from your personal credit. However, if your business takes off and you apply for loans for purchases, real estate or other large expenses, banks will look at your business line of credit when determining your interest rate, and the more established your line of credit, the better rates you’re likely to get.

More spending power

Business credit cards often come with higher lines of credit, which is how many small businesses get off the ground. Just remember, especially with business charge cards, you need to pay the bill off in full every month or else you’ll incur huge fees, which will likely negate the value of the points/miles accrued.

Bottom line

While you might think that your business is in the early days and you don’t need a credit card, business credit cards can provide important benefits to your company, including rewards for free travel, expense management and credit to grow your business. While you could get by in your personal life using a debit card or cash, leveraging the right credit card provides so many more benefits.

Featured photo by Kelly Sikkema/Unsplash.

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