When you own a business, keeping your business and personal expenses separate is important. Whether you perform your own bookkeeping and small business accounting or outsource to someone else, keeping track of your incoming and outgoing cash flow is key. If you’ve been wondering, “Should I get a business credit card?” the answer is often “yes.”

Getting a business credit card is not only helpful for accounting purposes, it also helps your business earn rewards and build credit. Best of all, you might qualify for a business credit card, even if you’re an independent contractor.

Read on to discover whether you need a credit card and how you can qualify.

Who qualifies for a business credit card?

Anyone who owns a business or otherwise generates taxable, non-W-2 income can apply for a credit card. Selling items on eBay, generating rental income, or driving for a rideshare company are just a few of the non-traditional activities that may qualify you for a business card.

Of course, both small and large traditional businesses are also eligible for a business credit card. It’s an easy and important way to keep your finances separate.

Generally, a business credit card requires a personal credit score of at least 670. However, some companies will make exceptions. The interest rates may be higher, and other perks may not be as robust.

Do I need a business credit card?

Whether you need a business credit card primarily depends on how your business spends money. Credit cards are excellent for short-term funding. That is, for any expenses you can pay off within 1 to 3 months. They’re an important part of managing cash flow.

Business credit cards are not suitable for major investments and long-term financing. Like personal credit cards, business credit cards have higher interest rates than long-term financing options, like mortgages and loans.

The best way to use your credit card is to finance smaller purchases, such as office supplies, business meals and entertainment, and other day-to-day expenses. This allows you to earn rewards, like travel perks and cash back, while building your credit.

Most traditional businesses will have at least one business credit card. They may also have cards for authorized users. If you’re running a non-traditional business venture, such as a gig worker or independent contractor, a credit card can help you keep your personal and business finances separate. This is particularly useful at tax time, so you can easily spot deductions. You’ll also have a much easier time reviewing your expenses.

Benefits of getting a business credit card

There are many benefits to getting a business credit card, including:

  • Higher credit limit: Business expenses are typically higher than personal expenses. Business credit cards have higher credit limits. Whereas your personal credit card may have a credit limit of $10,000, for example, a business credit card might have a $50,000 limit. As long as you keep your expenses to what you can afford to pay back in 1 to 3 months, the higher credit limit can be a boon.
  • Longer grace periods: Business credit cards often offer longer interest-free grace periods than you’d get with a personal card. A personal credit card may only have a 21-day grace period, while a business card may offer as long as a 3-month period. That can make a big difference when you’re financing a large purchase. Don’t forget to read the fine print, though. Some lenders charge post-grace-period interest on the entire balance, not just the amount owed.
  • Better rewards: Cash back, airline miles, gas rebates, and other money-saving rewards can be hugely helpful for your company. The more you save, the better your profit margins. Business cards often offer better rewards than you’d get with your personal card.
  • Separates finances: As you know, keeping your business and personal expenses separate is the key to good money management. Credit cards are another way to make that easy. Remember that they should only be used for business expenses—even if the rewards are much better than what your personal card offers.
  • Track employee expenses: Tracking and reimbursing employee expenses can be a time-consuming hassle. Instead, you can add authorized users to your card. This will drastically cut down on the time you spend reimbursing your workers. It also helps you keep an eye on exactly what’s being spent and where.
  • Financial management tools: Many credit card companies offer financial management tools, from statements analyzing spending categories to dashboards and other tools. Some even integrate into your accounting software. This makes it a lot easier for business owners to evaluate their spending habits and target specific rewards or bonus goals.
  • Does not impact your personal credit: Your business credit card will not impact your personal credit, with two exceptions. First, when applying for a card, the lender may conduct a “hard inquiry.” This can temporarily lower your credit score by a few points. Second, if you choose a card that requires a personal guarantee, you will still be responsible for paying off the card, even if your business fails.
  • Superior sign-on bonuses: Credit card companies usually offer sizable sign-on bonuses for business credit card holders. For instance, you might receive hundreds of thousands of airline points or a large cash-back bonus. These bonuses are often structured around spending a certain amount in the first three months. You may also receive an extended initial interest-free grace period.
  • Other perks: Finally, your credit card may offer additional perks, such as access to airline lounges, discounts on rental cars, and more.

How to get a business credit card

Applying for a business credit card requires more information than applying for a personal card. However, you will need to provide the following personal information, too:

  • Name
  • Date of birth
  • Social Security Number (SSN)
  • Personal contact information
  • Annual income from all sources

Your lender will need certain business information to determine your eligibility. This includes:

  • Business name: You may include either your company’s name or your own name, if you’re a sole proprietor.
  • Contact information: The address and phone number used to register your business. Sole proprietors can use their personal information.
  • Establishment date: List the number of years you’ve been in business or the exact establishment date.
  • Number of employees: Don’t count yourself. If you’re a sole proprietor, the number should be zero.
  • Business structure type: List your business structure, whether you’re a sole proprietorship, corporation, partnership, limited liability corporation (LLC), or nonprofit organization.
  • Federal tax ID: Either your Employer Identification Number (EIN) or your Social Security number should be included.
  • Revenue and expenses: The amount of money you make annually, plus an estimate of how much you’ll need to charge per month.

Once the company receives your application, they’ll evaluate your personal and business creditworthiness. If you pass the check, they’ll issue your card, and you can start earning rewards.

A credit card is a wise financial tool for any business owner. Charging short-term expenses is a great way to earn significant rewards and manage your accounting. With all the options available, you should be able to find a card that meets your company’s unique needs. Plus, you’ll build credit for your business and save time sifting through personal and business expenses. It’s a win-win situation, as long as you manage your spending wisely. 

As you can see, the answer to “should I get a business credit card?” is a no-brainer!

Free insights to help you take control of business finances.
Discover the best tips, tricks, and tools for better money management.