Applying For A Business Credit Card: Important Steps

(Business credit card) The purpose of applying for a business credit card is to establish your company’s identity with the credit card provider, ensuring that your company is taken seriously.

All the major companies hold the same interest rate and terms for all businesses, regardless of size or structure.

1. Deciding which credit card to get

The first step is deciding which type of credit card you need. It depends on what your company does. If your business requires a significant amount of travel, then travel rewards or airline credit card gives great perks that support the business acquisition of frequent flyers and air miles.

The people at note that If your business needs a lot of inventory, whether it be tools, equipment, raw materials, etc.,

Then a business card with no preset spending limit is recommended, so there’s no risk when making large purchases through credit. A cashback reward option also helps if your business expenses add up quickly.

2. Choosing between getting personal and business cards

If you already have an existing personal banking relationship with the same provider you’re applying for, then you can simply apply for a business credit card using your personal details.

Alternatively, if the provider has a partnership with your bank, and you’re able to transfer an existing balance (e.g., Amex and BOA) then that’s also a good sign that applying as a business will be successful.

Just ensure that all personal accounts including credit cards are paid off before applying.

3. Proving your company is legitimate

The only way the companies can approve your application as a business is by verifying it through Dun & Bradstreet, which offers several types of reports such as Master Business Reports and Corporate Directors Reports.

These reports ensure that the company exists, and the people listed within it exist too. You can provide them with a Dun & Bradstreet Data Universal Numbering System (DUNS) number as well if your company already has one.

4. Applying online

Once you’ve decided on which card to apply for and have the reports ready, simply go to the provider’s website and find their business credit cards section.

 Fill out an application with your personal details first — name, contact information, etc. — followed by a second application under the company name, address, legal status, etc.

You can even use a PayPal account linked to an email address as further proof of identity. Just be sure that all your applications are free from any typos or errors.

5. Waiting for approval

Don’t forget, these companies will perform a hard inquiry on your credit report, which will negatively impact your credit score. The application process can take anywhere from a week to over a month, depending on the card issuer.

Paying bills on time, keeping low balances, and applying for cards that are within your credit profile’s recommended limit are ways to ensure that you keep your score high.

Why are business cards beneficial?

A business card helps fast track your loyalty points as a business, unlike personal cards, which are slow to accumulate points. In addition, the annual fees tend to be waived for the first year, which is beneficial in managing cash flow.

You can even use them as a tool to recruit new customers by adding ‘refer a friend’ benefits, where they’ll get bonus points or cashback each time a customer you referred makes a purchase with their card.

 Business cards also help manage expenses by allowing you to input how much you’ve spent and what that money was spent on, helping save time at tax time.

Can every company use a business card?

No. For example, sole proprietorship usually doesn’t qualify since the business is not separate from you as an individual.

You can still apply for personal cards under these types of business structures, but it’s best to do so if you already have an existing personal banking relationship with the same provider.

Some businesses also need to use credit cards through their banks, which means that they’ll be given pre-set spending limits instead.

 Lastly, businesses whose only expenses are W-2 employees aren’t ideal candidates either, since that type of organization can’t accumulate points or miles.

Can your employees use the company’s business card?

Business Credit Card

Yes, but this will depend on your company’s credit card policy. Your employees might have to set up a separate PIN for themselves so that they can’t reach or exceed spending limits set by the business.

You should also specify how you feel about employees using the cards for personal expenses since only some companies allow it while others don’t at all. Once again, consider what kind of policies are within your company’s best interests and communicate them clearly to everyone involved.

What else is important?

A business credit card helps track everything you’ve spent money on throughout the year, which means that it’s easier to save time when filing tax returns.

This is beneficial in two ways: First, you won’t need to sort through receipts or written transaction records because everything has already been organized for you; second, it’s easier to provide proof of purchases (and deductions) if the IRS decides to audit your returns. 

A word of caution, however. Do not spend more money than you can afford to repay just so you can get more points on your card.

It’s important to keep track of how much you’re spending while working out a payment plan if necessary. You might also want to sit down with your accountant or tax preparer during the first few years of your business to keep yourself on the right track.

Second, a business credit card can be extremely useful for your employees. You can split a monthly bill into separate charges that each employee has to pay individually.

Which means that it’s easier to track who owes you money and how much they’ve already paid back.

This is great if you’re managing a team of freelancers or remote workers because the process reduces the chances of an employee not paying you back for work performed.

As you can see, getting a business credit card isn’t as complicated as it seems! These cards offer a lot of benefits and if you get one, you will be able to make use of all of them. Just follow the steps we mentioned, and you won’t have any trouble.