How to Choose a Small-Business Credit Card

Creating a credit card specifically for your business will help you keep your business and personal credit separate.
Photo Credit: Unsplash

Author: Michaelean Pike

A business credit card can simplify your finances by separating your personal and business expenses, which spares you huge headaches when preparing your taxes. Business credit cards also offer perks, such as reward points, purchase protections, and access to special features.

To apply for a credit card as a business, you first need to register your business with the IRS. Photo Credit: HowToStartAnLLC

Establishing Business Credit

Much like individuals, businesses can have credit scores. According to NerdWallet, personal FICO scores range from 300 to 850, while business credit scores range from 0 to 100. Many factors affect business credit scores, including credit-use patterns, the number of recent inquiries, and the length of time a credit line is open.

If you use personal credit when applying for a business credit card, you might lower your personal credit score because of the number of inquiries. You also won’t build business credit by using your personal credit history.

Mike Enright of BizFilings said your business must be an LLC or corporation to establish business credit. You also need an employer identification number or federal identification number (EIN and FIN), and you must register your business with the credit bureaus. It also helps to open a checking account in your business’s name, and pay all expenses from it.

Once you establish your business credit score, pay your bills on time and keep your finances healthy to keep your score high.

Choose the best credit card for your company's needs. Photo Credit: CNBC

Types of Business Credit Cards

Several types of credit cards are available, and your company’s size and needs will determine which is best. Large companies with millions in revenue use corporate credit cards, which don’t require a specific person to guarantee payment. The corporation is the guarantor.

Charge cards don’t have credit limits. Instead, you must pay them off every month or suffer costly late fees and penalties. Because charge cards have no preset limit, you need good credit to qualify for one. They often have annual fees, but they might also provide member benefits. These credit cards are good for business owners who can pay them off each month, and want the flexibility to use their card for large purchases without spending limits. An article on said this type of card is also a great choice for people who want (or need) to learn good credit habits. After all, it does not let you carry a balance for several months.

For companies that need to carry a balance, a good low-interest business card saves money. These cards often offer promotional periods, such as 0% APR for the first 12 months. Although these cards have preset credit limits, they might be easier to obtain than a bank loan, which gives small businesses more flexibility.

Another option is what Thomas Donaldson at calls “special interest credit cards,” which offer perks for spending in specific categories. Some of these cards, for example, offer reward points for travel-related purchases. Others, like the Chase Ink Plus Business Credit Card, give bonuses when buying office supplies. To determine if such cards are right for your business, review your regular expenses to see if you spend enough in a covered category to maximize your rewards.

Some credit cards have perks and incentives, like points or discounts. Photo Credit: Unsplash

Additional Perks

Besides determining which credit card is right for your business, you should also compare several cards for their perks, annual fees, and annual percentage rates.

Kari Luckett of said some business cards offer complimentary accounting features like downloadable reports and year-end summaries. Many offer purchase protections that you can’t get with cash or checks. Look for credit cards with introductory bonuses and rewards that meet your needs. Some retailers prefer cash back to airline miles, for example.

With a business credit card, you can also get free employee cards for staff members. That makes bookkeeping easier, and helps your account rack up reward points when employees make business purchases.

If you’re interested in optimizing your business’s finances, visit the MyATA service providers page to find a financial professional.

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