If you have a business, it is essential to apply for a business credit card because it allows you to separate your business expenses from your personal spending. A dedicated credit card for your business is also an excellent way to track your operational expenditures and increase your purchasing power. Plus, you can also take advantage of business perks offered by credit card companies.
Before you can start your application process, you first have to know if you qualify to get one. One of the minimum requirements to get a business credit card is that you have a small business with a conscious intention to gain profit. If you do not have any profit yet, you can still qualify provided that you have a good credit score. You can also use your credit score to see which cards you are eligible for.
Business credit cards are not only reserved for big corporations. Even if you are a freelancer or you have an online store, you can apply for a business credit card.
Personal Credit: If you are still starting, you are yet to establish your business, and so banks will look at your personal credit history to gauge your financial management skills and capacity to pay. If you have a good credit score, it would be easy to qualify.
Personal Guarantee: Some banks would require you to sign a guarantee that if the business fails, you can pay off your debts with your personal savings.
Bank Relationship: Before applying for a business card, make sure to build a relationship with your bank. A positive relationship can help you to qualify and gain approval.
Before applying for a credit card for your business, don’t forget to compare each credit card provider that you qualify for. You have to get the one that best matches your needs and requirements. For example, if your business requires you to travel often, it might be best to get the one that offers travel incentives and perks such as the use of the business lounge and conversion of miles and cashback offers.
Here are some tips to help you decide:
Annual Percentage Rate (APR): You have to choose a card that has a low APR, or the interest that you have to pay over 12 months if you have a balance. Some business credit cards offer an introductory rate of 0% for purchases for new members. Make sure to be on the lookout for such offers.
Fees: Aside from APR, you have to check if the business card comes with tons of fees. Otherwise, a low APR becomes useless if payment will just go to fees. For example, you might want to steer clear from cards that offer high annual fees or that charge a foreign transaction fee.
Rewards: As mentioned earlier, you have to choose a card that comes with tons of benefits and reward structure aligned with your business operations. Do you want miles, cash back, or points? Make sure, though, that you can comply with their redemption clause.
Card Type: You also have to consider whether you would want to have a regular business credit card or charge cards. Business cards let you carry a balance, whereas the latter doesn’t charge monthly interest, but you have to pay in full each month.
Legal Business Name. If you’re approved, this name will appear on the card. It must be the name that you used in your business registration. If you are, however, a freelancer or a sole proprietor, you can use your legal name. Small businesses who filed for a “Doing Business As” or DBA can also use their DBA name when they apply.
Tax Identification Number. Most credit card providers will not process the application if it lacks the tax identification number. Businesses must provide their Employer Identification Number (EIN). For freelancers, you can use their Social Security number instead, unless the IRS issued you an EIN. If yes, use your EIN.
Business Structure: You must inform the credit card provider of your business structure. If you are a freelancer, you can indicate sole proprietorship. If you are an LLC, you can choose either a corporation or a partnership.
Nature of Business: The form has a list of industries that you can choose from. Select the industry type that best describes the nature of your business.
Role: You have to provide your position in the business. You can indicate if you are the co-owner, the general manager, or founder.
Contact Details: Credit card companies need you to provide your business address and phone number. If you are doing your business from home, you can submit your home address.
Length of Business: Write the number of years you have been operating the business. If you’re still starting, you can put “0” in this portion.
Employees: If you have any employees, indicate how many they are. If you are a one-person show, just place “1” for yourself.
Annual Business Revenue: It is essential for credit card companies to know how much you are earning yearly. They often use this information to identify the credit limit they will give you. If you are yet to make a profit, you can put “0” in this line.
Monthly Expenditures: If you still don’t know, you can make an accurate guess of how much of your business expenses you will charge on the card. While not all credit card companies ask for this information, it is best to know the answer since they can use this to gauge your expenses.
Aside from providing information about your business, you also have to provide personal details, such as:
When you submit your form, keep in mind that the banks would start looking at your expenses. Don’t make any significant financial expenses for the meantime.
Maintaining a good credit history is crucial when you want to apply for a business credit card for your Las Vegas business. Make sure that you always pay your bills on time and that you do not make any unnecessary purchases that can hurt your credit score.
