Business credit cards saved my business and earned me thousands of dollars. A few of the amazing benefits include no impact on your personal score, having a higher credit limit, and having better welcome bonuses and cash back rewards.
Business Credit Card Application Walkthrough
Before we dive into how you can get your first business credit card I want to go over a few things you NEED to know.
Business itself is a loose term. Its difficult to define what a business really is, so even if you don’t think you have a legitimate business, most likely you do. Be sure to watch this video if you haven’t already to learn more about creative ideas on what business you can start or businesses you may already have.
Business credit will provide tremendous opportunities if you are looking to maximize your points. Business credit is almost always superior to their personal counterpart for a variety of reasons.
Business credit cards are on a separate line of credit:This means that a majority of business cards will not affect your personal credit report. This is extremely helpful when you start to add balances on your business card and you cannot pay off the full statement balance. Your personal credit score will not be affected.
Personal Cards on Steroids: Take for example the Chase Sapphire Preferred and the Chase Ink Business Preferred. Both cards have very similar offers:
$95 annual fee
Rental car coverage
However, the Chase Ink Business Preferred offers additional perks such as cell phone protection, better earning categories, and a higher welcome bonus of 80,000 points rather than 60,000 points which is the highest among all of the Chase Ultimate Reward point earning cards.
How To Get Started:
EIN or SSN?
There are two ways you can apply for business credit cards. You can start by using what you already have and that is your SSN.
Getting started with your social security number:
. Many members inside our community use their SSN to apply for business credit with no problem. Card issuers are business friendly and want as many clients as possible for the long run. According to the SBA, in 2010 the United States had over 27.9 small businesses. Just imagine how many small business owners we have now!
Applying with SSN:
Use your social security number in place of an EIN.
Select sole proprietorship as the business type.
Use your full name for the business name (NOTHING ELSE). This is important if the card issuer needs you to verify your business name.
Use your home address for the business address. Many small businesses are based out of their homes. This is completely acceptable and has worked for myself and all of our members. One thing to note is try to avoid using a PO Box as this can cause issues.
As a sole proprietor it's completely acceptable to use a portion of your personal income as a revenue source. I recommend users to always keep in mind personal assets, projected net worth, and estimated revenue as well since this may be used to repay debt on the account.
Have you ever had a spouse or close friend help you with your business? These people can be considered as a part time employee. Keep in mind, you can add additional employees in the future as your business grows, but if you cannot consider anyone as an addition to the business putting down just ONE employee on the application is perfectly acceptable.
Simple as that you are good!
Method Two EIN.
To put it in layman terms, a business EIN is just a business version of your social security number. This is mandated by the federal government so the IRS can identify people who need to pay taxes.
Do I NEED to pay taxes if I get an EIN?
You do not need to pay taxes off your business if you do not make a certain threshold. This is dependent on what your business is and how much you make. I recommend consulting a local CPA or an accountant for exact details on taxes as I am not a certified or recommended source for taxes.
How can I apply for an EIN?
To apply for an EIN you simply have to go on IRS.gov and fill out the application online during the hours of operation which is Monday to Friday, 7 a.m. to 10 p.m. Eastern Standard Time.
The application itself is very straight forward and easy to get. You are only allowed 1 EIN, but you are allowed multiple business certifications under your state legislation. The EIN will just be your federal identification number that you can then use for business credit applications and signing up the business as an entity within the state.
Why should I use an EIN over my SSN?
I personally use my EIN over my SSN for a variety of reasons.
To separate my business entities from my personal self. I recommend doing this not only for tax purposes but also legal reasons. Think about an LLC, a limited liability company separates you from your personal assets for liability protection. I personally do not like to mix up my business and personal ventures. Creating that EIN allows me to comfortably do this.
I prefer EIN over SSN because it adds more credibility with an established business. I have been asked MANY times for an EIN from credit issuers, banks, and other business services.
Filing business taxes and avoiding any penalties
Preventing identity theft: You will be using your EIN a number of times and this increases the chances of identity theft and fraud. Separate your personal SSN with your EIN for an extra layer of protection.
Building trust with vendors and companies. When you go out to business events and seminars, sometimes they ask you for your EIN. Be prepared and have this on hand. You never want to slide in an awkward position for something as easy to get as an EIN.
Open more business accounts. With this EIN you can start multiple businesses under your state legislation. I’ve created multiple businesses from e-commerce, digital marketing, and even this personal finance blog. I use my EIN to be the umbrella for these ventures I have started rather than using my personal SSN and full name.
What do I do after I apply for my EIN?
After you apply for your EIN you will receive an email from IRS.gov that looks like this (below). This will give you your official document. Save it and do not lose it.
2. Next, open the card application. It should look like this:
3. Select sole proprietorship as the business type unless you have another registered entity. I recommend sole proprietorship for this because it is the easiest and most affordable entity you can obtain.
4. Use your state registered business name for the business name.
5. Use your home address for the business address unless you have an actual office location. Most digital businesses operate from a home office, so this is completely acceptable.
6. Annual Business Revenue/ Sales. Credit issuers are asking you for your projected revenue. I would stay honest as possible with this amount, but if you are unsure take your best revenue day and create an estimated projection for that year.
An example is if you made $300 a day and you are projected to scale higher than you can multiply that $300 with the days left in the calendar year. If you have not made too much revenue do not be discouraged to still apply. I have seen users who put $200 and still get accepted. Credit issuers understand that most businesses can’t turn a profit for a couple years. Put your honest amount for the business revenue and hold tight!
7. How many employees do you have? Most people are going to have just one employee which is themselves and that is completely acceptable.
8. General Industry: This is going to be dependent on what your business or side hustle is. What I put in this category during my first application was under Retail: Non-store retail. Note: Selling things online is considered internet retail or non-store retail. After I chose that I went ahead and put my designated category as used merchandise stores. One of my favorite hobbies in college was going to local thrift stores and flipping items on Ebay!
9. Good News! Scrolling down we now come to the last part of the application and this is your personal information. This part should be as easy as any regular credit card you have applied for in the past.
10. Keep in mind for the total gross annual income you can add many different sources of income on this section. Understand, if someone is working a 9-5 job and they may be interested in a business card. There current side hustle income may not match up to the annual gross, but that’s completly okay!
The annual total gross income can include your household income. Your wife, husband, spouse, or other family members. Just be sure to get consent from them and access to any proof of documents such as tax or accounting forms that they may have in case credit issuers ask for proof of verification!
Finally: Read the terms and conditions carefully and click submit.
Feel free to browse my list of favorite best small business credit cards here if you are finally ready to take advantage of business credit cards.
Congratulations you just finished applying for your business credit card. So whats next?
If you are in the small minority of lucky candidates the issuing credit card company will auto approve you for the business credit card.
If you were someone like me then you will have to submit additional documents after you get a notice in the mail.
The documents you need to submit to the credit card company include verification certificates such as the EIN number, a utility bill and an ID.
Now they will require you to send a physical document through the mail, or fax it to them .They do not take digital documents via email for security reasons, however these the documents they request for are very easy to obtain and send off.
Here is a video of my experience when submitting the additional proof documents.
What documents should I send to the credit issuers?
Start with your sole proprietorship certification, your EIN document you receive from the IRS and a utility bill. I recommend going above and beyond because when I first submitted just one document it took an additional 2-4 weeks to go through the process again because everything was going through snail mail express.
There are easy ways to obtain a utility bill. Sign up for platforms such as Shopify, Squarespace, or even a g-suite account and provide evidence of your company name on these bills to the credit issuers:
BUSINESS CARD FAQ: Quick Tips YOU NEED TO KNOW:
1 . You will get a hard pull on your first business card application but like I mention in many of my videos. Hard pulls only lower your credit score temporarily, but the advantages outweigh the small point drop immensely.
2. After your first business card it will be easier to get auto approved for the rest of your cards. Most of the issuers will not do a Hard Pull on your personal credit account but your miles may vary for this. After I got my first Chase business card I have not received a hard pull from them and other issuers when applying for other cards.
3. You will have two seperate account username for business cards and personal cards. I recommend calling the credit issuer and asking them to merge everything under your business account so you do you do not have to log in multiple times to check your cards and points.
4. You may be asking yourself so which credit card should I start with now?? Work on the Chase business ink cards. I first started out with the Chase Ink Business preferred, then the Chase Ink Cash, and finally moved got the Chase Ink Unlimited. If you are able to get all three cards, that is an estimated point value of over 180,000 Ultimate reward points just right there. Right after the Chase cards I highly recommend getting into the American Express Business cards as well. Check out the link below for some of our favorite small business credit cards!
5. Not all credit card issuers do not report to your personal credit report. Issuers like American Express and Chase do not affect your personal credit report, however Discover and Capital One are known to report to your personal account for business credit cards.
6. You need to have an acceptable credit score to get accepted for business credit cards. I always recommend working having a fair- good score on good chances of getting approved.
7. So you applied for the card online and you got denied. Call the reconsideration line at 1-888-270-2127 to explain your situation. The agents will ask you for additional information on the annual business revenue, anticipated spend on the card, and further details. Be honest and let them know your situation. After a few brief holds you can expect your card to get approved. If not, hang up and call again until you get a better agent.
8. MOST IMPORTANT. Enjoy your new business credit card. Make sure you are able to hit the welcome bonus requirements, enjoy your points, and be smart with that awesome business credit line.
Congratulations on finding this article and Good Luck!