Many people aren’t aware of the fact that anyone can apply for business credit cards, even if they are not part of a corporation or LLC. Just use your own name as the business name, and your Social Security Number as the Tax ID.
Why? Because any individual can be a business as well. The business type is called a sole proprietorship. Maybe you sell garage sale items or crafts on eBay. Boom! You’re a sole proprietorship. Done any freelance work for a friend? You’re a sole proprietorship. This is the most simple business entity, but it is fully legit and recognized by the IRS. Unless you apply for another one, the name of your business is your legal name, eg. John Doe.
When you apply for a business credit card, you will have to put down both your Social Security number and the Tax ID number for the business. If you are a Sole Proprietorship, you Tax ID is your Social Security Number. (Unless you filed for a EIN). For the vast majority of business credit cards, if even you are a corporation or LLC, you will still be personally liable for business debts. That’s why they’ll usually ask you for your SSN anyways.
Remember, if you are a sole proprietorship there is no legal distinction between you and your business anyhow. Business debts are personal debts. Personal debts are business debts.
(Also, unless you want to deduct your purchases as qualified business expenses on your tax return, you really don’t need to worry about any tax issues or filing anything special with the IRS. You can simply buy things with the card and pay off the balance as you would your other credit cards. If you do want to take deductions, please consult your tax advisor.)
Because of this liability, you will get a hard credit inquiry to your personal credit report just like apply for a consumer card so that the issuer can make a decision whether to offer you credit. (Now, businesses can also have their own credit scores, but that’s another post for another time.) However, for most business credit cards the card itself won’t show up on your personal credit report. This means that you can open and close accounts, have a bunch of new accounts, and max out the credit lines without affecting your personal credit card score. This also means you can make thousands from playing the 0% Balance Transfer game without worrying about your credit score!
In addition, I use this fact to get more credit card bonuses. I was reminded of this recently by my mom, actually. My parents live in a smaller city which is basically only served by Delta Airlines, so they love SkyMiles. When you are in a small city, tickets are expensive since you can’t get a nonstop flight. So they always get over 2 cents to the mile when redeeming for free tickets.
Anyways, my mom applied for the Gold Delta SkyMiles American Express Card for the 17,500 free bonus miles (Even though now new card owners can earn 30,000 miles), and then my dad applied for the SkyMiles card for the free miles. My mom asked me if she could cancel the card and apply again to get more free miles. Not so quickly, I don’t think, but while don’t you apply for the Delta Business SkyMiles AmEx card for another 20,000 free miles? First year is even free too. She applied and got accepted, now next Thanksgiving is at my place 😉
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So Jonathan… if i decide to do this, how will I know whether or not these cards will show on my personal credit? Also if someone were to have their account paid late a few times would it be on the personal credit score or business score? Thanks!
US Airways also offers a Bank of America credit card with 25,000 bonus miles on sign up, which allows you one free round trip anywhere in the US. Additionally, it gives you one free entry to their sky club and if you spend $250 per year on the card you get two $99 vouchers per year to put towards your tickets.
Does applying for business cards like this really work? For instance, I’ve coveted the Advanta business card for awhile, but heard that they will call to confirm business documents, etc. I figure if you applied as a sole proprietor, you wouldn’t have any business documents, and they wouldn’t approve you…
how likely is it that a credit card company will give you a business credit card have no business credit? And are there any situations where you business credit would show up on your personal credit report?
I like the idea of getting an EIN to build up buisness credit. However, I have no intention of actually setting up a buisness at this time and don’t want to file a buisness tax return.
Does anyone know if you have to file a return if you set up an EIN or whether having one would cause the IRS ask for an audit if no return for that EIN number was filed?
Thanks, great tip!
Btw, typo at “Not so quickly, I don?t think, but while don?t you apply for…” While should be why.
“how likely is it that a credit card company will give you a business credit card have no business credit? And are there any situations where you business credit would show up on your personal credit report?”
Virtually every business credit card is backed by your own personal credit. That is, whatever you rack up on the card, you are personally liable for, even if the business goes bye-bye. So, usually, they really only care about your personal credit. None of my biz cards show up on my personal credit report, except for the Citi Professional which is a weird card which is not advertised as a business card but has some characteristics of one. Of course, there may be exceptions to any rule.
I don’t have a small business but I am trying to start a career in professonal racing. Would it be illegel to have a business credit card? Car parts are expensive and with the credit card I have now I max it out and pay it off to fast. I need a higher credit limit but The card I have now they don’t seem to understand that parts arent cheap they will fill up a 1000 dollar credit line. And since I do work I pay that off in like a week so it doesn’t really help me any at all. I wana apply for a business credit card so I chan have a higher limit. But I don’t wanna get arrested in the process. What do u think?
What should I fill on the citi application that asks for “years in business”? I’m thinking just a few years… since I graduated college.
How long have you been in business? 😉
For me, I’ve been reporting Schedule C self-employed income since 2004 so I use that number. Of course, I’m sure Citi has no way to verify this one way or another. But for my corporate cards, I think I only put down 1 year.
Re: Article,
I hope that works, i am a small business owner/counselor, with an EIN, not even in use, yet. I ordered it late, for 2006, i claimed my business in 2005. I would like my personal credit to remain completely separate from my Business Credit. I have read other articles about small businesses “purposely” combine your personal SSN with your EIN on applications. These cancels the whole concept of personal and business ID separation. The IRS, likes to restrict the use of EINs (or not give much information?), however all over the internet, there is way more inflexibly with EINs. I have seen it pop up online, as a “scam”, but i believe this is with Non-Business individuals, looking for a new identity. I guess it is good to gain personal research. Thank you, for the public article. I need the comfort and reassurance, or specific instructions is a better statement.
PS/I am discovering the difference, I feel at ease:
The con (Scam) was simple. Companies would target consumers with bad credit and offer to create a brand new credit file for them by substituting an Employer Identification Number (EIN) for their Social Security Number (SSN) along with a new address. EIN’s were obtained from the Internal Revenue Service on behalf of the consumer. With the EIN and a new address the companies would either have the consumer apply for credit with the “new information” or the company would apply for them. When the creditor would run the application it would automatically create a new credit file because the computer would be unable to find the consumer in the database due to the new address and SSN.
I would like to know which business credit cards do not use ss numbers, I have already gotten Staples and Office Depot. I need a major one.
Can anyone help me
Walmart Business,Officemax,Shell GAs–Ihave these and you can use walmart at Sam’s as well.I know they are not major-but wanted to pass this info on.I’ve really utilized the Walmart -at Sam’s Club for food supplies.
I have been doing the balance transfer thing for years. Doesn’t look like you’ve missed any of the tricks. So far I’ve made about 30K doing it. Between my wife and I we have been able to keep a running balance of 175K to 225K for several years now. Citi Bank has been one my primary cards for both of us. However, they got rid of the cap on the balance transfer fee. If you use the credit card application on your cite, the terms and agreements still have the $75 cap in them. However, none of the cards have this cap on the Citi website.
I’ve been coming to your cite, among others, for a while now because you keep pretty decent updated lists of the best cards which saves me a little work. But I wanted to alert you this so that you could update your info on Citi cards regarding the balance transfer fee to return the favor a bit.
Alternatively, you can let me know how you are still getting the $75 cap. That would be even better.
will this affect my taxes? will i have to pay business tax by having a business credit card?
After checking the internet on Advanta Platinum Business Card, I noticed in the fine print that there are no transferring of a consumer credit card balances over to the business card. Have you found this to be true? Should I still apply?
Your blog is very informative. However, earning money and balance your credit cards is pretty hard task but your post and experienced serve and teach me how to handle and make it more simple and manageable.
Thanks for the tips… Best regards.
Hey guys…just recently found out about this site and looks promising. I got a question though about the business card from Costco. I heard that that 5% on gas is GREAT, but don’t you need to file any cash back that you get with the IRS? One of my friends said that this is the reason why he does not get business credit cards since you would need to file it with the IRS. So would it be worth it to even get it or just the consumer version? By worth it, I mean like not having any tax that comes with these cash back rebates and anything associated with owning the card.
Advanta business credit card is a farce. I signed up for it at 7.99% and in 3 months they raised it to 25%!!!!!!!!!!!!!!!!!!!!! They told me I could pay all of my bills with their card and yet, n one of the companies I pay do businewss with them. Bank of America is the card i have now that allows me to pay all of my vendors and entities and the rate is 9.99%. Do not gte lured in with a low rate fro advanta, only to find out that they will take it to over triple the amount you start out with.
Hey Jonathan… I just applied for the Advanta Small Business Card and was accepted, but I was only offered a credit line of $2,500. I have a 760 FICO with perfect credit, and I was just a little confused on why they offered me such a low credit line. I was looking to make a balance transfer of $8,500 from a ESPN card that I have a 0% APR until January ’09. Do you think that I filled out something wrong on the application with Advanta, or should I over-inflate my earnings and the yearly revenue that my fictitious small business does? I have been doing this all throughout college to pay my tuition and it has worked every time. The only problem is, that I’ve already used up the offers with Discover, AMEX Blue, and Chase Platinum from prior balance transfers. Thanks in advance, and keep up the good work!
Tom Skladany said:
> Advanta business credit card is a farce … yet
> none of the companies I pay do business with them.
I don’t know what card you got from Advanta. Their web site pictures a MasterCard (the terms and conditions page says it’s a “MasterCard Executive BusinessCard”), so as long as they accept MasterCard, they should accept the Advanta card.
Hey,
Does anyone out there know..considering that Advanta is closing its business accounts by May 30th whether it looks better on your credit to close it yourself so that it doesn’t show that it was closed by the issuer?
how do i find business card that dont ask for your personal SS# thanks