Who is eligible for a business credit card?

If you're aiming to generate income by providing goods or services, you are considered a business owner. This applies whether you're pet sitting, freelancing, or managing a retail establishment with multiple employees.

As a small-business owner, you qualify for a business credit card.

How do business credit cards function?

Business credit cards assist small-business owners in monitoring expenses, overseeing daily operations, and distinguishing between personal and business expenditures.

They represent a type of revolving credit, perfect for new business owners who may not have the funds to maintain adequate inventory or manage seasonal and unforeseen expenses. Most business credit cards provide employee cards with specified spending limits for each user.

In comparison to personal credit cards, business credit cards typically offer higher credit limits and benefits designed specifically for small businesses. This allows business owners to build business credit while enjoying enhanced travel rewards and other incentives that can help offset business costs.

Who is eligible to apply for a business credit card?

Regardless of whether you run a sole proprietorship, partnership, corporation, or Limited Liability Company (LLC), you can apply for a business credit card. There's no need for a prior business credit history—credit card issuers will consider your personal credit history and credit score instead.

If you're still questioning your eligibility for a business credit card, let’s take a closer look at some typical businesses you may operate as a self-employed individual.

Self-employed individuals

Being self-employed means you are your own boss, setting your own hours and paying yourself from the profits generated by your business. Self-employed individuals can offer products and services to the general public or cater to specific clients.

Self-employed individuals often take on the following roles:

• Online retailers
• Vacation rental proprietors
• Home bakers
• Notary publics
• Agricultural producers
• Blog authors
• Woodworking artisans
• Consultants
• Childcare providers

This list is certainly not comprehensive. Almost any side gig can qualify, even if your earnings are modest.

Freelancers and independent contractors

A freelance worker, or independent contractor, is also classified as a self-employed business owner. You retain the ability to set your own schedule and choose your projects. However, unlike other self-employed individuals, you are typically contracted to deliver services or products based on specific agreements.

You relinquish some authority over your work, as the hiring party has input on how their projects should be carried out.

Freelancers and independent contractors may include:

• Freelance authors and journalists
• Transcription specialists
• Skilled tradespeople (builders, plumbers, electricians, etc.)
• Real estate professionals
• Property supervisors
• Website developers
• Catering services

If you received a Form 1099 for your work, it's likely that you're classified as a contractor. If you're unsure of your status, it's wise to consult a tax expert.

Gig economy participants

Similar to freelancers and independent contractors, gig workers are self-employed individuals contracted for specific tasks. What distinguishes them from other self-employed business owners is the typically brief duration they spend delivering goods and services to clients.

Most gig workers concentrate on short-term or one-off projects before transitioning to the next job. They also tend to promote their services through marketplace platforms or applications.

Gig economy participants can include:

• Drivers for ride-hailing services
• Drivers for food delivery
• Landscaping professionals
• Handymen
• Personal fitness trainers
• Content writers for websites
• Web developers
• Construction laborers
• Accountants

Gig work often lets you set your own schedule, making it a straightforward and efficient way to qualify for a business card if you haven’t already done so.

Categories of business credit cards for small-business owners

When selecting a credit card for your business, consider your spending patterns.

If you’re launching a business or have low monthly expenses, a no-annual-fee business credit card is a smart starting option. You can also find cash-back business cards that offer a flat percentage back on all business-related spending, as well as cards with higher reward rates in specific categories like gas, dining, office supplies, and travel.

As your business expands and your monthly costs rise, you may want to explore the enhanced features and advantages that come with higher-tier business credit cards. Be aware that these often carry an annual fee.

Numerous business credit cards offer attractive welcome bonuses, such as the Capital One Venture X Business. New cardholders can earn 150,000 bonus miles after spending $30,000 within the first three months of account opening.

While not every small business incurs such high expenses, those that do can reap significant rewards. When used wisely, these cards can offer numerous benefits that justify the annual fee.

Key takeaway

Clearly, having a business credit card comes with numerous benefits. However, it’s crucial to make timely payments and maintain minimal credit card debt. The less you incur in interest and fees, the greater your advantages will be.