The EASY Way To Get Business Credit Cards (Full Guide)

so business credit cards are like a credit card cheat code that entrepreneurs and business owners have discovered that allows them to earn extra tens of thousands of dollars worth of free credit card points or cash back but these credit cards are also one of the most misunderstood and underestimated parts of the entire credit card game because you don't need this huge corporation with hundreds of employees to qualify the truth is the average business credit card is really designed for small business owners and regular people now before you click away and say that you don't qualify for these cards I want you to hear me out because one of the main takeaways that I want you to get from this video is that almost anything can be considered a business so whether you're a freelance photographer an Uber driver a seller on eBay or Etsy a content creator or many many other things if you're offering some sort of a service big or small then you qualify for business credit cards so in this video I want to give you all a free guide to business cards as someone that's been taking advantage of them for the past two years so I'll go over everything you need to know and answer all the important common questions that people have like can I put personal expenses on a business card or do I need an LLC or Corporation to apply and then I'm also going to lay out the five main reasons why I think people should get business credit cards okay now to start off here let's talk about the most common business there is that many people are running without even realizing it that qualifies them for business cards and that would be a sole proprietorship that I'll refer to as a sole prop now a sole prop is just you doing business under your own name so if you're selling things online or you've provided a service in any form that you were paid for or you're trying to get a profit from but you didn't take any formal steps to set up a business structure like an LLC well then by default you're just considered a sole prop and you're responsible for any profits losses or debts from your business so again common examples could be you playing part-time as a musician at a local bar flipping Air Jordans or other sneakers like I used to do tutoring students doing website development or video editing but basically the list is very very long again the definition of a business is very broad so if you do anything in your free time where you're trying to make money or even if you're sort of in the early stages of doing research to starting business of any size you still technically we can call yourself a business is a sole proprietorship without ever becoming an LLC or a corporation now sometimes it does make sense to create a separate business entity but many small Soul props out there might only be doing a few thousand dollars in sales per year so you definitely do not always need that separate entity if you're keeping things pretty small and in many cases a few thousand dollars in Revenue per year is actually a good starting amount to qualify you for business credit cards you also might want to have maybe a year or two of business experience to put on your application to increase approval odds but again if you've already been starting up your business and doing things like buying equipment or doing research or whatever else you might be doing that's still technically business history as long as it's within reason so always make sure you're being honest now once you've confirm that you've got a business that qualifies for business cards there's a few things to know about why these credit cards can be so useful so the first thing is that in most cases business credit card activity does not report to your personal credit report so for example if you got approved for a business credit card with a ten thousand dollar limit and then you bought five thousand dollars of inventory with that card that five thousand dollar balance would not get reported to your personal credit report now if you'd use one of your personal credit cards with a similar ten thousand dollar limit and a five thousand dollar balance did get reported that's a fifty percent credit utilization that is well above the 10 utilization that I like to recommend so your credit score would likely drop a bit also you probably need to give your business some time to begin selling that inventory to bring in revenue and then pay down that five thousand dollar balance so if you continue with the cycle of buying inventory on personal credit cards as you maintain High utilization your personal credit score is likely going to suffer which we don't want so having the right business credit card would keep that balance off your personal credit report and then help you to manage your cash flow in a much smarter way now having business credit card activity stay off your personal credit report is going to vary by issuer so for example issuers like Chase and American Express are typically only going to report business credit card activity to consumer credit bureaus if you're either behind on payments or not in good standing for a certain amount of time but then an issuer like Capital One is going to report business credit card activity at all times on your personal credit so just always do your research before you decide what card to apply for because this is often an important thing that gets overlooked a lot now in a few minutes I'm going to give you some recommendations of what business credit cards to apply for or consider getting and I'm also going to talk about a few more really important benefits of business cards but first here I figured the best way to learn about how to apply for them is to look at a real application as an example so let's go through an application just as a sole prop versus maybe applying as an LLC like I did and then I'll also talk about some of the differences between using a social security number versus an employer identification number in your application so this page here is for the chase Inc business unlimited which is one of my favorite simple business credit cards that I'll leave a link to down below if you want to learn more but here you can see that we have two main sections for this application one for personal info and then one for business info at the bottom and this is a good time to tell you another really important takeaway from this video which is the fact that business credit card issuers for many types of small business credit cards they're really interested in using your personal credit history and your credit credit score to approve you for these business cards now you still want to put down the right information in the business section that we'll talk about in a minute here but for many business credit cards like this you're going to be giving a personal guarantee anyway no matter what business structure you have with a sole prop or an LLC or whatever so basically that means you can't just buy something with this card and then run off thinking you could just leave that debt and abandon your business and not have to pay it back you're still gonna have to pay back whatever you're using this card for if your business can and obviously like I said if you do start missing payments then any issuer is going to start reporting that to personal consumer credit bureaus which will drop your score anyway so the issuer wants to see that you have a good personal credit score without any bad marks like missed payments or anything weird like that and for most people I'd recommend having a credit score that's somewhere at least above 700 before thinking about applying for any business cards and there are options out there if your score is below 700 but in general the best business credit cards with good signup bonuses features and benefits that are really worth your time are gonna require a good score so I would focus on increasing your personal credit score first if you need E2 and I've got another video that I'll leave down below that breaks down exactly how to do that but anyway back to the Chase Ink unlimited application so first under the personal info section you're just going to choose owner and then we're going to put our first and last name along with our birthday and our mother's maiden name for tax ID type we're going to leave that with social security number and then just enter in our SSN right next to that then next we'll have to put in our address so I'm just going to put the address of my apartment not really and then we can enter in our email and our phone number as well but then at the bottom here we have our total gross annual income where you should be putting in your combined annual income of not just your salary but also any other income which might be coming from your business and again since Chase is going to be looking at your personal information to see if you're good fit to get approved for business cards that you're going to personally guarantee this income just shows that you're going to be able to pay back whatever you're putting on this card now after that we get into the business info which should be similar enough with any other issuers out there compared to what Chase has here on their application so I'm gonna fill this out like I'm applying as a sole prop but then I'll also show you what I put on my own business credit card applications with my LC see that I have so as a sole prop for the legal business structure we would just select sole proprietorship and when I selected this Chase actually Auto filled this for my business legal name with my own name and if we click here on this little information icon we can see that it says in most cases a sole proprietorship's legal name is its owner's personal legal name so because Chase auto failed that and then gives us a little explanation hopefully that gives you a little bit more confidence in applying in this type of way because obviously Chase realizes this is pretty common then I just say to put your name as the desired business name on this card as well and then to keep things simple we'll check nowhere asks if our business uses another name now under that is where people get confused and they get stripped up with the tax ID type so by default it says employer identification number Ein but if we're applying as a sole prop then what we can do in most cases is just change that to social security number and then enter in or SSN instead and Ein is basically just like a social security number but for your business and if it's just you doing a small business and you don't have any employees or any other complicated stuff like that then you probably don't need an EIN as a social prop and you could read more about this online but many people apply for business credit cards just by using their SSN and it works just fine then we'll just check yes that the business address is the same as our personal address which is absolutely fine as well and you don't need a separate office just for your business or anything like that and then we can enter in the number of employees and our business phone number as well which can also be the same as our personal phone number now you can see here that I put zero for the number of employees because Chase actually says to enter zero if you're the only employee which is going to be the case for many Soul props but I will say that in the past with Chase and with other issuers for other business credit cards as well where I'm the only employee I've put one in the application and I know other people do that too so really I think either zero or one in this field works because it gets the same message across you basically just don't want to lie and say you've got 10 employees working under you or something like that especially when you're only doing a few thousand dollars in annual revenue because obviously that doesn't really make sense after that we're gonna put our business established month and year and for this again we don't want to lie you can think back to when you really started up your business with maybe doing research or buying equipment or other stuff like that so it doesn't have to be the exact date that you were profitable from because most businesses are not going to be profitable from the start anyway next to that we're also going to put the annual revenue or what we think we're going to be making per year on average with this business and generally it's good to maybe expect a few thousand dollars so maybe five or ten thousand but again you want to be honest here as well so that if any questions ever come up from Chase or any other issuer you could basically easily explain what your reasoning was for putting a certain annual revenue on that application now under that we have business category type and subtype and for this we just want to try to match our industry as best as we can so I found something here that would closely resemble my YouTube and social media business under the information category then you can put in your estimated monthly spending which could maybe be a few hundred dollars or whatever works for your business just make a good guess and then we do not need any employee cards so we're just gonna scroll to the bottom here and then check that we agree and then click submit now maybe if you want to take your business just a little bit more seriously then you could form an llcu which I think is a good thing to do to sort of legitimize your business now out for the future as you grow it and that's pretty much what I did so I started preparing my YouTube business in the fall of 2020 and then uploaded my first video in January 2021 but I did that all as a soul prop before I even had any Revenue so once I started making maybe a couple hundred dollars per month in late summer 2021 that's when I formed an LLC and got an EIN that way I could apply for business cards and open business bank accounts now there's plenty of services out there that can help you to do that or you can even do it on your own but after you form an LLC then you might also want to add an EIN which is super easy and quick to do just by searching for that on Google or by going to the iris website so back to the application your personal info is basically going to stay the same but then under business info we're going to change Soul prop to limited liability company or LLC and then from there we're going to change the business legal name and the name on our card to the LLC which can be whatever here for this example then we'll just change the SSN to an EIN and enter in whatever employer identification number we were assigned from the IRS and finally we can scroll down to the bottom where a new field popped up it's asked us to say the percentage ownership we have in this LLC so I'm going to say it's 100 here and then we just scroll down some more and check the agree box and then click submit all right so now that we've walked through some application examples let's go ahead and expand on a few really really important things we've touched on so far by talking about what I would say are the five main reasons to get business credit cards and then we're going to answer three common questions that I see people ask the most so that way you can go in the whole process of getting business credit cards as confidently as possible okay so quickly going through five reasons to get business cards number one is going to be something that I mentioned earlier which is the fact that business credit card activity does not report to your personal Credit in many cases now I also said that it varies depending on the issuer and depending on if you're making all your payments on time so from what I know Capital One reports business activity to personal credit almost always then Chase and American Express only is going to report that business activity if you start missing payments after a certain number of days also when you apply because these issuers are looking mostly at your personal credit report in order to approve you because of that personal guarantee when you apply there's still a good chance you're going to get hit with a hard increase on your personal credit report that's going to drop your score by a few points in the short term for a few months then that stays on your report for around two years now hard inquiries are nothing to be afraid of because their effect quickly goes away and your score quickly returns back to where it was after a few months have passed and sometimes if you're already a customer with personal credit cards with a certain issuer they might not run a hard inquiry but either way it's just something to be aware the second main reason to get business credit cards is because of the increased rewards potential mainly from things like higher signup bonuses than what you might find on personal credit cards you're also going to be able to earn points miles of cash back and many business focused categories which can be really good if you have a business that actually requires you to spend a lot of money on expenses like maybe advertising or inventory in order to make sales and generate Revenue but one thing to note here is that because a lot of these categories as well as the features and benefits are business focused I found that sometimes it might be harder to justify business credit cards with Annual fees so what I suggest here is to start with a a no annual fee business card which I'm going to give a few recommendations for here in just a minute and then as you grow your business and expand your operations over the next five or ten plus years then you can slowly start to add in annual fee cards when they make sense also even though higher signup bonuses can be a good thing they usually come with higher minimum spend requirements as well because obviously many businesses spend a lot of money to operate so for example the chase Inc unlimited currently has an offer of 750 of cash back which is really earned as 75 000 chase points after spending six thousand dollars in the first three months so just make sure you plan out your spending and maybe apply for a business card when you know you have a larger expense coming up the third reason to get business cards is because typically you can get higher credit limits than personal credit cards as well which can be really useful for your business and one note here is that the credit limit that you're approved for especially as a new business or maybe as your first business credit card that might not be as high as you want or as high as you need just because issuers are looking at a ton of different factors when they're approving you so if your limit is low and your business expenses are making you spend up to that limit every single month and they're consistently paying down that balance off in full they just call it the issuer and tell them that you need a higher limit and they should be able to help you there the fourth main reason to get business cards is that it really helps to keep business and personal expenses separate and I'm gonna touch on putting personal expenses on business cards in just a minute here but for me when I'm trying to keep track of business expenses my business credit cards are really what's helping me to simplify things when it comes to doing taxes at the end of the year because obviously I can write off different business expenses and reason number five is that these cards also help a lot with cash flow so back to that example from the beginning where I'm buying five thousand dollars of inventory with a ten thousand dollar credit limit on my business card that is going to allow me to not have to pay the full five thousand dollars in cash up front to my supplier so it gives me time to sell my inventory to then use that cash to pay off my balance and then there's also zero percent APR offers that some businesses take advantage of as well but that's a whole other topic for a whole nother video now from all the information here in this guide there's still three questions that I want to clear up about business credit cards with the first question being can I put personal expenses on my business this card and the answer to that is yes you can but they're not intended for that so you might not want to even though it is up to you know the bank is not going to verify or investigate whether every single one of your purchases that you put on your business card is a real business expense because they just don't have the time or the resources to do that and they're also collecting interchange fees from your spending no matter what it's for anyway and even if they did say something to you or give you a hard time about your spending habits they would probably just lose you as a customer to one of their competitors now don't confuse this and then think that you can still write off any personal non-business expenses that you put on your business card because that's going to be tax fraud so you still need to keep track of what is business and what is personal spending and technically if you look at it the other way around many people use personal credit cards to pay for business expenses when they're just getting started with the business so that's mixing spending there too but people still do it so again the whole argument of whether you can or should put personal expenses on a business card in my opinion really comes down to the convenience of separating business and personal expenses for tax purposes and you can do what you want but just know the risks and maybe read up on what other people are saying when they talk about it on Reddit or just get some other thoughts about it another question is what business card should I get and like I said I would definitely recommend starting with no annual fee cards first and also try to go for cards with good signup bonuses with minimum spends you know you can hit along with other good spending multipliers and features for me I started with the chase in cash and the Chase Ink unlimited and then got the AmEx blue business plus as well so all these cards are really great to start with and I'll leave links down below that are a great way to help support this channel if you want to learn more about any of these business credit cards now a third question is what should I do if I'm not instantly approved or if I'm denied for a business card and for this you should be ready to call the reconsideration line that many credit card issuers have where you can basically just provide more information and then explain your situation and a lot of times that can actually help them to approve you or at least give you better approval chances in the future by telling you why you were denied for this you can either wait to get an email or a letter in the mail explaining their initial denial of your application and then you can call them to explain things a little bit better to a person on the other end of the line or what I did did when I was not approved instantly for my first business credit card was I called them after a few days of waiting then I asked if I could provide any more info and they had me send them some business documents which actually got me approved the next day but like I said a few times already in this video I have two main takeaways the first one is that almost anything can be considered a business so almost anyone should be able to qualify for business credit cards and the second takeaway is that business credit cards for small businesses usually require a personal guarantee so the issuer is going to rely heavily on your personal situation and credit to approve or deny your application that's why I would say that one of the most crucial things that anyone should do before they ever apply for a business credit card or a regular credit card should be to get a credit score of at least 700 or ideally even higher than that and that's exactly what you need to watch next in this video over here that explains the five easy steps to increase your credit score so I highly recommend you go ahead and take advantage of that video next to learn how

Channel: Daniel Braun

Views: 106,896

Keywords: business credit cards, business credit card, business credit, credit, credit cards, credit card, how to get a business credit card, how to get business credit cards, how to get approved for a business credit card, how to get approved for business credit cards, build business credit, best business credit cards, best business credit cards 2023, chase ink cash, chase ink unlimited, amex blue business plus, chase business credit cards, amex business credit cards, daniel braun

Id: HJuOgHKLiAc

Length: 17min 51sec (1071 seconds)

Published: Tue Apr 18 2023