How to choose a credit card for your startup

by Ana Lopez

Opinions of contributing entrepreneurs are their own.

Even if you’ve raised a lot of money for your startup and have plenty of cash in your bank account, you’ll need a credit card to fulfill much of the day-to-day bureaucracy of running your business.

A business credit card is a credit card designed for business use and typically offered to business owners, entrepreneurs, and small business owners.

These cards are separate from personal credit cards, and there are several reasons why you might prefer a business credit card over a personal one. If you use a business credit card, you can keep your business expenses separate from your personal expenses. This makes it easier to track your business expenses for accounting and tax purposes, and can also help you avoid admixture of funds, which can be a problem if you’re being audited by the IRS.

Related: Do You Need a Business Checking Account for Your Startup? It depends on these 8 factors.

Also, business credit cards often have higher credit limits than personal credit cards, which can come in handy if you need to make large purchases for your business. Finally, many business credit cards let you issue employee cards and set spending limits on those cards. This way you can control your employees’ expenses and ensure that they only use the card for business expenses.

Business credit cards are issued by banks and other financial institutions, and the terms and requirements for obtaining a card vary depending on the issuer. Different business credit cards have different benefits that you’ll want to consider before deciding which card is right for you.

Low or no annual contribution

While cards with hefty annual fees usually offer more benefits, you’ll still need to offset the annual fee with your card rewards.

Fortunately, there are some excellent business cards that have a low or no annual fee. You need to assess whether it’s worth paying an annual fee for your new card.

Low costs

In addition to an annual fee, you may incur transaction costs, interest costs, cash balance costs and other costs. With the wrong card, any rewards you earn quickly disappear to cover your costs.

You should be aware of all possible fees before signing up for your new business credit card. If the card offers good rewards, you may decide it’s worth paying more fees, but you need to think about how the card will perform in the long run.

Accounting tools

Many business cards offer account management tools, which can be a huge benefit if you want to stay organized during tax time.

If there are certain features that can simplify your business administration or are compatible with your existing business software, this could be a great benefit to you.

Credit reporting

One of your startup’s long-term priorities should be build his credit history. As credit history is established, it opens up new credit opportunities for your business.

So you need to make sure your new business credit card is reported to the major credit bureaus.

Employee cards

As startup owners, you have plenty of things to take care of. This means you don’t want the hassle of handling every business purchase.

If your new card allows employee cards, you can enable your team to pay for items and not worry about expense reimbursements. This will also help you better track all your business expenses.

Responsive support team

As a startup, you probably anticipate rapid growth and have unpredictable expenses. Whether you need to increase your credit limit or need certain features, you need to be able to rely on the support team to be there for you.

Travel features

If you need to travel for business, you should look for a travel features map. From no foreign transaction fees to airport benefits, there are some excellent card benefits around.

Keep in mind that if you plan to travel internationally, you may want to choose a card that many merchants accept, such as Mastercard or Visa. If you are not sure whether to choose money back or a travel cardcalculate expected monthly rewards to understand which is better, or simply request two cards if possible.

Solid dashboard

Finally, to effectively manage your credit card bill, you need access to a clean dashboard and a smooth-running app. If you’re dealing with time-sensitive issues like payments, you’ll find it frustrating trying to deal with a clunky app or dashboard that isn’t intuitive.

It’s worth checking online credit card reviews and the reviews for the credit card app to see if there are any red flag issues that could highlight potential problems.

What you need to apply for a business credit card

As a startup, you may not know what you need when applying for a business credit card. So, here we’ll break down what you need to have on hand to support your application.

While the requirements for different credit cards may vary from issuer to issuer, the information commonly requested includes:

  • Your VAT number: If you don’t have a tax ID for your new business, and many business owners don’t, you can usually use your personal Social Security number.
  • Your company name: If you have a legal name for your business, you can use it in your application. If you are a consultant, freelancer or other company without a company name, you can use your own name.
  • Your legal entity: This is part of the application where you need to determine how the company is organized. Most small businesses and startups in the US do not have a formal legal structure as they operate as sole proprietorships where the individual owner is essentially the business. You can still apply for a business credit card as a sole proprietor, but if you are a partnership or have another type of legal business structure, use it on the application.
  • Business address details: If your company has a different address, phone number and email address than your personal information, you must provide it. If you do not have a separate industry or location, you can use your personal data.
  • The start date of the company: This is pretty simple, but you need to be precise and use the date you founded your startup.
  • Business income: Revenue is the amount of money your startup brings in, which is different from your profit. As a startup, you may not have received any income yet, but you can put $0 on the application.
  • Kind of industry: This differs from the business structure and the bank or credit card company needs to know what industry or niche you work in.
  • Interested parties: Finally, you must provide details of individuals who own 25% or more of your business. If your business has co-owners or interested parties, be sure to have their names, addresses, social security numbers, and dates of birth, as the publisher can request them.

As with a personal credit card, it’s worth poking around for the right product. So before you decide on a credit card for your startup, you should check all available options.

How do you determine if you qualify for a business credit card?

To determine your eligibility for a business credit card, the following factors are typically considered:

  1. Business and personal credit score: Your business credit score is one of the most important factors in determining your eligibility for a business credit card. A higher credit score generally makes it easier to qualify for a card. While a personal credit score isn’t the most important factor in determining your eligibility for a business credit card, it can be considered if your business has no credit history.
  2. Business income: Your business income is also taken into consideration when determining your eligibility for a business credit card. Lenders will typically want to see that your business generates enough revenue to cover credit card payments.
  3. Company History: The length of time your business has been operating, as well as its financial history, will also be considered when determining your eligibility. A company with a longer history and a positive financial track record will generally be more likely to qualify for a business credit card.
  4. Type of company: Some credit cards are tailored to specific types of businesses and may require certain qualifications.

It’s also important to note that different credit card issuers have different requirements and standards for approving business credit card applications, so it’s always best to check with the lender for more specific information.

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