When and How to Get a Business Credit Card

Evan Gautier

When you started your side hustle, a credit card for your business was probably the last thing on your mind. You wanted to earn some extra money doing something you love. Now that the side hustle has started to make some money, you find yourself incurring some expenses. It’s at this point that getting a business credit card comes to mind.

You might think getting a business credit card is difficult. You may imagine tons of paperwork and a few hours of time from someone in the accounting department. Luckily, this is not the case. If you have a side hustle, you have a business, and should be able to open a business credit card fairly easily.

In this article we’ll walk through how to get a business credit card along with some important related topics.

How to get a business credit card

Business credit cards are not just available to large corporations. You don’t even need to have an LLC. In most cases, card issuers will extend credit to sole proprietors (including side hustlers).

First things first. If you want a business credit card, you will need to have a legitimate business. The good news is that the IRS has a fairly generous view of what constitutes a “business.” According to IRS.gov, “The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services.”

The key words here are “any activity” and “for the production of income.” Essentially, this makes any side hustle a business, so long as you are doing it with the intention of making a profit. Note that actually making a profit is not a prerequisite for having a business.

Tip: 75 Ways to Make Money on the Side

As for what information you will need to provide, it varies by card issuer. Generally, you will need the usual: name, address, and social security number. In addition, most issuers also want to know your business name (can even be the same as your name, if you wish), and your expected annual revenue for the business.

Some issuers will also require, or at least prefer that you provide an employer identification number (EIN) on your application as well.  Obtaining an EIN is not difficult. You can usually get one online in a matter of minutes via the IRS website. Like your social security number, an EIN is used as a way to identify your business for tax purposes.

“An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN.” -IRS.gov.

Many issuers will also want to know your line of business. That is to say, what category does your business fall into? Are you doing landscaping work, mowing lawns, or are you a writer with a blog or website? Generally, there will be a list of categories in a drop down menu, allowing you to choose the one that best describes your side hustle.

Resource: 16 Tools Every Home-Based Business Should Use

Keeping business expenses separate

For many people with a side hustle or microbusiness, one of the hardest things to do is track their business expenses. Tracking expenses can be particularly difficult if you use a personal credit or debit card for business expenses.

Having a business credit card offers an elegant solution to this problem. With a business credit card you can put all your side hustle expenses (and only those expenses) on the card. This eliminates the potential headache of sifting through statements at year’s end, trying to separate personal and business expenses.

Earn rewards

Just like with personal credit cards, one of the great things about business credit cards is the ability to earn rewards on your purchases.

Business credit cards can offer rewards for everyday company purchases, something which is great for most business owners and side hustlers. Business cards usually have different reward spending categories than personal cards. For example, some business cards offer 2-3x points per dollar spent on airfare, advertising expenses, or restaurants, while others offer up to 5x on cell phone and internet costs as well as spending at office supply stores.

Also like personal credit cards, there are business cards that offer cash back, and some that offer miles or points. For example, Chase has one of each: The Chase Ink Plus for points, and the Chase Ink Cash for cash back. You can see a breakdown and review of each of the Chase Ink Business cards here.

Business Credit Cards May Show Up on Your Credit Report

A business credit card may show up on your personal credit report. Whether it does depends on the card issuer and whether you use your personal credit to secure the card. According to Experian, “Unless you used your personal credit as part of the application for the business credit card, it will not appear in your personal credit report.” NerdWallet surveyed nine of the major credit card issuers, and it was split down the middle as to whether they reported card activity to the credit bureaus.

To be safe, it’s always wise to assume any activity on your business credit card will affect your credit. Note, however, that this doesn’t apply to an employee of a larger business who carries a company credit card. We’re specifically focused on the side hustle crowd where you are your business.

Interest Paid on Business Debt is Tax Deductible

Prior to the Tax Reform Act of 1986, there was an allowable deduction for interest on personal debt. Most people know that interest paid on credit card debt is no longer tax deductible. However, this is only true of personal credit card debt.

Interest paid on business debts is considered a tax-deductible business expense, and may be deducted in the year the interest is paid. Keep in mind that this is only for interest on legitimate business expenses paid for by credit card. If you use the same credit card for business and personal expenses, you must be careful to only deduct the portion of the interest attributable to the business expenses. This is another good reason to keep personal and business expenses separate.

Card Recommendations

With all the different options for business credit cards, picking one can be a challenge. Luckily, we have a great guide for selecting the best business credit card for your business, which can be found here.

Trending: My Life as a Freelancer

Published or Updated: June 27, 2016
Evan Gautier About Evan Gautier

Evan is an attorney licensed in California and Oregon. Though his legal practice is mainly focused on civil litigation, Evan has a passion for tax, retirement planning, and personal finance. When not in court or at the office, Evan can be found hiking around Southern California or tending his suburban backyard farm with his wife and daughter. Evan earned his J.D. from Western State College of Law, and an LL.M. in Taxation from Chapman University.

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