A lot of people don’t know this, but anyone can apply for a business credit card, even if they don’t own a “business.” All you have to do is use select “sole proprietor” as your business type, use your name as the business name, and use your Social Security Number as the tax ID number.
Who can be a sole proprietor? Anyone can claim to be a sole proprietor, which is the most basic type of business recognized by the IRS. According to the IRS, “A sole proprietor is someone who owns an unincorporated business by himself or herself.” This means that anything you do can be considered a business. This can include selling things on Ebay, holding garage sales, babysitting, freelance work, consulting, coaching, or anything else.
Even though a sole proprietorship is a legal business, there are no formal requirements such as paperwork or registration fees for starting a sole proprietorship. The only qualification to be a sole proprietor is to claim you are a sole proprietor. It’s as easy as that.
Note: It’s important to understand that with a sole proprietorship, there is no legal separation between you and your business. Your business and personal debts are considered the same.
Why business cards can be good for individuals
If you apply for a business credit card as a sole proprietor, you can use it for personal use as well. Though you may find it a good idea to keep your business expenses separate for tracking and tax purposes. That said, some business credit cards are actually better than a card offered by the same company and branded with the same name. So you may look into these options if you need a business credit card.
Here are some of the reasons business credit cards can be good for individuals:
Better rewards and bonuses. Credit card companies know that most businesses charge more every month than individual customers and are often more profitable. This means the competition is fierce and credit card companies will do what it takes to recruit new customers. This works in your favor as they often have better cash back and rewards programs, and sign up bonuses to attract new customers.
Higher credit limits. Many business credit cards offer higher credit limits compared cards issued to individuals, because businesses often take in and spend more money than individuals. Why is a higher credit limit good for an individual? Because your credit score is determined using a formula that includes credit utilization (how much of your available credit you use). A higher credit limit can raise your credit score.
Balance transfers and 0% introductory offers. A lot of people use balance transfer offers to take advantage of credit card arbitrage (paying 0% interest on money borrowed from credit card companies). This can be a profitable enterprise. Others like to take advantage of 0% introductory offers so they can go out and charge some startup costs and pay them off over time without paying interest. When used correctly, these actions can either make or save you a lot of money.
Anyone can sign up for a business credit card
I applied for my first business credit card as a sole proprietorship, soon after starting this site. I later formed an LLC to make it easier to separate my expenses and I later signed up for another business credit card under my LLC. I currently use the The AmEx Gold Card and a Discover Business Card.
Recommended Business Credit Card
Great For: Rewards
Annual Fee: No annual fee*
- Earn a new cardmember bonus of $150 after you spend $500 in net purchases on your card within the first 90 days of account opening.
- 3% cash back on all cellular, gas and office supply store net purchases
- 1% cash back on all other net purchases
- No cap on total rewards and they never expire!
- Plus, a 25% Annual Cash Rewards bonus, up to $250
- No annual fee*
- Net purchases are purchases minus credits and returns