Should You Open a Business Credit Card?

Why should you bother with business cards?

Before diving into the considerations of a business card, I think it’s important to call out why you should consider it in the first place. And like most things, it comes down to one simple fact:

Business cards help you earn points & miles faster than anything else

You are probably familiar with the world of personal credit cards. You might also know that many of these cards have language in their terms & conditions that make it so you can only get the sign-up bonus for these cards every few years. For example:

  • You can only get a Chase Sapphire signup bonus once every 48 months.
  • American Express personal cards often have a ‘Lifetime Language’ rule
    • This prohibits you from getting another welcome bonus for the same card for anywhere between ~5-7 years
Business cards, in large part, do not have this problem.

There are still limitations, of course, but they are a lot more relaxed. This is because businesses naturally will spend far more money and at a much faster rate than an individual.

  • Chase has a series of business cards called ‘Ink’ cards. It’s basically the business equivalent of the ‘Sapphire’ suite.
  • American Express often sends out ‘No Lifetime Lanugage (NLL)’ offers directly to current business card holders

Well, what is a ‘Business’?

The IRS has a pretty broad definition of a ‘business’:

“The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services.”

The IRS rule says nothing about whether it’s a lemonade stand, a fortune 500 company, or you simply selling ‘consulting’ services for a hobby or area of expertise. It actually doesn’t even say anything about whether you’re turning a profit (plenty of real businesses lose money).

That means if you have a collection of Pokemon cards and little Timmy down the street wants to buy one, you could sell a single card and could technically be a ‘business’. Hell, you don’t even need to have sold one to be considered a ‘business’.

Or that means if you have an interest in baking and you create an Instagram page with the thought of maybe, one day, possibly trying to get advertising revenue, you could have a business.

And these ‘businesses’ are good enough for the Chase and Amex’s of the world to let you open a business card with!

Addressing common concerns to opening a business card

Tax Implications

As long as you aren’t trying to write off any questionable things as expenses on your tax return, you are good to go. In fact, I would recommend you simply do not try to report a single thing for your ‘business’ as business income or expense, unless you’re actually making money.

So you started a ‘consulting’ business dealing in advice on hair styling? Don’t try to write off any accessories or equipment. In fact, just consider it a hobby and don’t report it at all.

At the end of the day, that onus falls on the individual anyways. Going back to my previous note, as long as you aren’t trying to report personal expenses as business expenses on your tax forms, you are good to go. The IRS won’t care, so the banks won’t either.

So should you apply for business cards?

In my opinion, absolutely.

It’s the fastest and most efficient way for you to accrue points, and as I mentioned the Chase Ink Business suite of cards are your best bet. No annual fees for the best cards, and the sign-up bonus essentially gives you 10-20x back on your spending.