Whether you are only starting or already have an established small business, you can get a business credit card. Although there are some requirements you’ll need to consider, there are plenty of business credit cards specially designed for small businesses and startups. Having a separate credit card as an independent contractor has many perks, and we believe the application process is worth the trouble. In this article, we will give you all the information you need to start on the right track.
How to get a business credit card as an independent contractor
Not only established business professionals can get a business card — it’s an option available to anyone who sells goods and services. This often is surprising for people, but it makes sense when you think about it. Anyone who provides a good or service must follow certain business procedures, even if they don’t know it.
This can include:
- Freelance writers, web designers, coders, etc.
- Uber and Lyft drivers
- Coaches who create online courses
- People who resell items from thrift stores
- Flippers (houses, cars, and so on)
Are you a legal business?
When it comes time to apply for a business credit card, you will need to own legal business. During the credit application process, you will need to share your EIN (Employer Identification Number) as well as your social security number. You can get an EIN from the Social Security Administration quite easily – click here to get started.
What is your credit score?
Furthermore, you will need to know your credit score. This is especially true if you just started your business, although some business card issuers may use this credit score for existing businesses as well. If your credit score isn’t where it should be, try to work on increasing it. An above average score will increase your chances of getting a business credit card.
What type of business credit card do you want?
Finally, you will need to choose a credit card for your business. Like with personal credit cards, there are many business credit cards for new businesses available. You should base your decision on the required credit score, reward systems, perks and special offers, and fees. To find out this information, check out the official websites of your preferred credit card provider or call them if you need further explanation.
What do you need to get your business credit card?
Once you’ve established those three items, you can apply to get a business credit card. The usual information you need to include in the application are:
- The legal name of the business
- Your tax identification number
- The business type/business structure
- The industry type/nature of the business
- Your role in the business
- Business address and phone number
- How long you’ve been in business
- The number of employees
- Annual business revenue
- Estimated monthly spend
If you are a new business, lying on the application may sound like an attractive idea. However, we recommend you to be truthful since lying could negatively impact your credit score in the long run. In the end, you can always look for other cards if the first credit card company denies your application.
Perks of a business credit card
Now you know how to get a business credit card, but you may still wonder why you should get it in the first place. There are many benefits of having a separate card if you are an independent contractor.
Firstly, you will have more flexibility and buying power. That means you’ll have higher credit limits for business expenses, which, in turn, will help grow your business. Instead of waiting for new business or for funds to clear, you can start expanding your business now with credit. That said, be careful not to max out your cards. Instead, only spend when you know you can pay off the charges.
Another huge perk is having your personal expenses separate from those related to your business. Once your business starts to grow, tracking taxes and creating reports will be much easier. Instead of going through your bank records or other credit card statements to find business expenses, everything will be listed on your business credit card statement. Some cards even offer software like TurboTax as a perk.
Savings and rewards
If for nothing else, business credit cards are an excellent choice because of the bigger rewards they offer. You will be able to collect reward points for many business purchases, and you can use them as cash back, airplane miles, or in other ways. This is where choosing the correct credit card is crucial. You want to make sure the rewards fit your needs and planned expenses.
Business Credit Card FAQs
How do I compare different credit cards?
There are several main features you should take a look at when choosing the right business credit card as an independent contractor. First is the annual percentage rate (APR), which is an interest rate paid yearly if you carry a balance. APR is especially important if you plan on carrying debt, and some credit cards have 0% APR in the first year. Other than APR, you should also look at the annual fee and foreign transaction fee. Finally, consider the card type and whether the reward system fits your needs.
Can I apply for a business credit card if I don’t have a consistent income?
Yes, you can, but do not have high expectations. Not having steady earnings could make getting the credit card a bit harder, but if your projected income is high, then you may still get approved.
Can I use the rewards on my business credit card for personal expenses?
We don’t recommend mixing your personal expenses with business expenses. Filing taxes will be difficult, and you may also face some legal consequences depending on the structure of your business. However, you can take work retreats or some other work-related events – just be sure to do business on these trips. The IRS has some great information on how to include vacations as work expenses.
Do I need to open a business checking account to get a credit card?
This answer will depend on the type and size of your business. If you have an LLC, DBA, or a partnership, then you will need to have a separate account. However, since we are writing this for freelancer and contractors, you are likely a sole proprietor. If so, you probably don’t need to get a business checking account (but it won’t hurt to get one!). For exact information, call your credit card provider.
I have been a freelance digital marketer since 2014, specializing in content marketing and editing. My interest in finance and frugal living began while living overseas, inspiring me to start this blog. When I am not helping clients generate more leads or market their services, I explore the world, listen to podcasts, and dream big.