For small business owners having a business credit card will aid in managing your cash flow. You can separate your personal and business expenses and give you benefits and rewards tailored to your needs.
If you’re a sole proprietor and wondering whether it’s possible to get an enterprise credit card, and if you do the best one, this is what you should be aware of.
Can a Sole Proprietor Get a Business Credit Card?
A majority of companies, not including sole proprietorships, can be capable of opening a credit card for small businesses. This is because small-business credit cards use your credit history as a personal rather than a business credit score to decide if you’re eligible.
You must fill in the Social Security number or individual taxpayer identification number in the application. Even though sole proprietors don’t have to possess an EIN or employee identification number (EIN), obtaining one and incorporating it into the application can help establish your credit profile for business and make it simpler to get loans from other lenders in the near future.
How To Choose a Business Credit Card for Sole Proprietorship
Regarding personal expenses, Choosing the appropriate credit card to cover the business expense is crucial. There are a few things to take into consideration when shopping to compare alternatives:
- Your credit score: Many of the most reputable small-business credit cards are for those with good credit. As per FICO, this typically refers to having a credit score of 670 or more. You can check your credit score to assess your credit score. Then, focus on credit cards with favourable approval rates in light of your score.
- Your costs: Look at your top expenses when you are an owner of a business. Certain business credit cards provide an accelerated reward for specific cost categories. This allows you to earn more when you spend the most. If you do not have a large amount of spending in a particular area, think about a card with an excellent reward rate for each purchase.
- Your personal preferences beyond reward points, think about the additional features you’d like to see in the form of a credit card. Consider, for example, whether you would like cash-back rewards you can utilize to grow your business. Or prefer to earn points or miles that you could apply to business or personal travelling? Are you interested in an initial zero-interest credit card to help with start-up expenses? Compare several credit cards to understand what features are on offer and which matters to you the most.
Benefits of Credit Cards for Sole Proprietors
It may not be essential to get a corporate credit card for sole proprietors, but owning one has many advantages.
Separate Business and Personal Expenses
In a sole proprietorship, there is no legal separation between your company and you. Keeping a financial distinction is essential when you have to file your taxes. Business credit cards will help you maintain your financial records and identify which expenditures can be deducted.
Minimize Impact on Your Credit
Although business credit card companies generally require a personal credit assessment before you can apply for a card, a lot do not report your daily transactions to consumer credit bureaus. However, some might be able to report destructive activity. However, it’s essential to pay payments punctually.
Improve Cash Flow Management
When you use a credit card for transactions, you borrow cash from the issuer. In the case of a credit card, it could give you several weeks following the date of your statement to settle your balance, and if you make your payment monthly in total, there will be no interest fees.
A floating option for your credit card payment will make it much easier to monitor cash flow, specifically when your income isn’t consistent.
Build Business Credit
In the absence of a separate legal entity, you can establish a credit history for your business through a sole proprietorship as well as a business credit line will help. You can begin by registering your business with the state of your business and asking for a D-U-N-S-N number from Dun & Bradstreet, one of the most critical corporate credit bureaus.
It’s not necessary technically to possess an EIN to help build credit for your business. However, you could require one to get loans in the future, so it’s a good idea to get one. Using the new credit card frequently and paying on time will build an excellent business credit score.
Enjoy Rewards and Perks
A lot of business credit cards provide reward points on everyday purchases. Depending on the card you pick, you could also profit from other features specifically designed for businesses, like free employee credit cards that have spending limits, connection with accounting software that is popular for expense reports, and many other features.
Certain business credit cards provide additional perks like the promotion of 0% APR, travel fee credits, insurance protections, and much more.
How To Get a Small Business Credit Card as a Sole Proprietor
Once you’ve finished considering your options, choosing which one you’re interested in applying online will be straightforward. Although the form of an application may differ according to the issuer, you’ll have to fill out these details:
- Your title
- Full name
- Birth date
- The maiden name of mother’s maiden name
- Social Security number or taxpayer identification number
- Address
- Contact details
- The annual income of gross
- The legal structure of the business
- The business name
- The name you want to see on the card
- Employee identification number (if you’re lucky enough to have one)
- Contact number and address for the business.
- The number of employees
- Business established date
- Revenue from business operations for the year
- Credit card expenditure estimates for March
Type and category of business
There’s a chance for you to decide if you’d like to use employees’ credit cards. However, you may also apply for them at a later time. After you’ve filled in all the information required, You can review the card’s conditions and terms. When you’re satisfied, send your application. The majority of times, you’ll receive a reply in a matter of seconds. However, the company that issued your credit card might sometimes mark your request as in the process and send you an acceptance letter.
The post How To Choose A Business Credit Card For A Sole Proprietorship. first appeared on News Week.
