Applying for a Business Credit Card

Written by nickel - 9 Comments

Continuing along the path toward the separation of our business and personal finances, we have are now the proud new owners of a business credit card. I previously posted a list of business credit cards with signup bonuses, and that’s where we started. As a reminder, you don’t have to have an actual business to apply for these cards and take advantage of the — simply use your name for the business name and leave the Federal Tax ID blank.

We first applied for (and received) the Amex Business Gold Rewards Card. While this card has a $125 annual fee after the first year, it also came with $150 in signup bonuses. Thus, we’re not likely to keep this card beyond the first year.

Our choice for the longer term is the CitiBusiness Card with ThankYou Network which not only offers rewards, but also has no annual fee.

There are, of course, other options out there. For example, the Amex Starwood Preferred Guest Business Card, which offer $100 in signup bonuses, but has a $30 annual fee after the first year. Thus, you can make a good bit of jingle by applying for these cards, but you probably won’t want to keep them beyond a year.

Truth be told, we don’t really need a business credit card, but having one will make the bookkeeping a bit easier (anything charged to that card will be a business expense, so we won’t have to sort through expenditures at tax time). It also helps with the substantiating the independence of our business endeavors, which is important when it comes to maintaining the liability protection offered by an LLC.

Published on February 14th, 2007 - 9 Comments
Filed under: Credit Cards, Self Employment
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Comments (scroll down to add your own):

What about interest rates? You should find if there’s a ’savings agent’ for small business cards
Comment by steve — Feb 14th 2007 @ 2:04 pm
Steve: Good question, and I have no idea. We never carry a balance, so the interest rate is a complete non-issue for us.

Comment by nickel — Feb 14th 2007 @ 2:22 pm
Question: Does the “business” credit card impact your credit? I always assumed that they did, but obviously I’m not sure. Thanks! Wes
Comment by Wes — Feb 14th 2007 @ 4:03 pm
This is the strategy I use for my business. It is really easy to just charge everything on the one card and maybe once a month, just import the expenses in quickbooks to record.

p.s. great blog, i just started mine and hope it can be half as good!
Comment by my wealth journey — Feb 17th 2007 @ 9:51 pm
Not that you would have a problem with making payments on time, but be careful with your “business” card. When you are current and nothing is wrong with your credit with them, your card is treated like a separate entity.

But the moment you slip up and make a late payment or miss a payment, the personal guarantee you agreed to when signing up for the business card will make this line go on your personal record.

I had problems with this in the past. Mine was even a full blown corporation and I got a business card with the corporate EIN. I had assumed it was all going towards the business credit and not my own.

Anyway, business got tough and the company couldn’t make a couple full payments and before you know it this account was showing up on my personal credit report and severely impacted my credit. Beyond that the business did need to close and I was personally responsible for a large chunk of debt.

I know in your situation this won’t likely apply, but just a warning to people about the true workings of a business credit card. 99.9% of business cards you apply for are basically personal cards that will use your business tax ID until you mess up, which then revert to you thanks to the personal guarantee you agreed to when signing up (it is in the very fine print).

Obtaining true business credit without a personal guarantee can take a few years of building actual business credit that is reported to agencies such as Dun & Bradstreet before a credit card company will ever consider lending to you without the guarantee.

So for anyone considering getting business credit, just be careful and treat it like personal debt and you’ll be fine. Don’t assume that a late business payment won’t affect you because it is a business card
Comment by Jeremy — Mar 1st 2007 @ 9:44 am
Jeremy, thanks for the info. I did not know that it would ‘move over’ to the personal line of credit. I have a business card that is ‘applied for’ using my name and credit - and now I will keep a closer eye on it.
Comment by YeOleImposter @ DogberryPatch — Mar 3rd 2007 @ 7:28 pm