The Best Business Credit Cards for a Sole Proprietorship

The Best Business Credit Cards for a Sole Proprietorship

The Best Business Credit Cards for a Sole Proprietorship

You don’t have to be a big business to benefit from a business credit card. If you are a sole proprietor — meaning simply that you own a business that is not a separate legal entity — business credit cards can be quite useful.

In sole proprietorships, the owner is allowed to co-mingle business and personal finances, so using a business card can help keep track of business expenses and separate them from personal expenses for accounting and tax purposes. With the right cards, you can also earn rewards for your business spending.

Applying for a Business Credit Card as a Sole Proprietor

When you are a sole proprietor, there is no legal separation between you and your business. So it’s important to understand that in this situation, you will be held personally responsible for your company’s debts — including credit card debt.

This also means that when you apply for a small business credit card, the issuer will most likely consider your personal credit history in evaluating your application — especially if your business is not yet well-established or generating much revenue.

If your personal credit is poor, you may be denied a business credit card — although there are some business credit cards that offer opportunities for those with less-than-stellar credit scores to build better credit. On the flip side, if you have good personal credit, you might be approved for a business credit card even if your business is not making much money yet (or even before it begins operating!).

It’s important to be honest about your financial situation in your business credit card application. When applying as a sole proprietor, you will usually report all your income, including revenue from your business and any other sources. Having an existing relationship with the bank you’re applying to — such as a checking or savings account — can sometimes help your chances of approval. If you are a sole proprietor, you don’t need an EIN (Employer Identification Number) to apply for a small business credit card; you can use your Social Security number.

Here are some of the best credit cards for sole proprietorships:

Chase Ink Business Preferred

The Chase Ink Business Preferred card comes with a big bonus: You can earn 80,000 bonus points once you spend $5,000 on purchases in the first three months after opening your account. Points are worth 25 percent more if you redeem them for travel through the Chase Ultimate Rewards program, meaning those 80,000 points are worth around $1,000 in travel.

As you use the card, you will earn three points for each dollar spent on your first $150,000, and then one point per dollar after that. The annual fee for the card is $95, but this can be claimed as a business expense for tax purposes.

Chase Ink Business Cash Card

For sole proprietors who want to earn rewards on common business expenses without paying an annual fee, Chase offers the Ink Business Cash Card. With this card, you can earn 5 points per dollar spent at office supply stories and on internet, cable and phone services (up to the first $25,000 per year). You can also get two points per dollar spent at restaurants and gas stations (also on up to $25,000 annually). Other purchases earn 1 percent cash back.

Additional benefits include a zero percent intro APR on purchases and balance transfers for the first 12 months, and the opportunity to earn $500 cash back if you spend $3,000 on purchases in the first three months after you open an account.

American Express Business Gold Rewards

With the American Express Gold Rewards credit card, you can get big rewards for some common business expenses, including:

  • Airfare purchased directly from airlines
  • Advertising in select media
  • Gas station purchases
  • Shipping
  • Computer hardware and software
  • Cloud computing purchases made directly from select providers

Out of these, you can choose one category that will earn you five points per dollar spent. Spending in the other categories will earn you two points per dollar spent, while all remaining purchases will earn one point per dollar.

You can also earn 50,000 Membership Rewards points when you spend $5,000 within three months of opening your account. The annual fee for this card is $175, which can be claimed as a business expense on your taxes.

American Express SimplyCash Plus Business

The SimplyCash Plus Business Credit Card from American Express offers rewards for business spending with no annual fee. For purchases with office-supply stores and mobile phone services, you can earn 5 percent cash back. In addition, you can choose one other category that will earn you 3 percent on purchases. Category choices include:

  • Airfare purchased directly from airlines
  • Hotel rooms purchased directly from hotels
  • Car rentals purchased from select car rental companies
  • Gas stations
  • Restaurants
  • Advertising in select media
  • Shipping

You can also earn a $250 statement credit after you spend $5,000 within the first six months of opening your account. Spend an additional $10,000 or more in your first year of membership, and you can earn another $250 statement credit.

Chase Southwest Rapid Rewards Premier Business

If you’re looking for great travel rewards for business or pleasure and you fly Southwest, Chase’s Southwest Rapid Rewards Premier Business card may be a good choice. Currently, Chase is offering a bonus of 60,000 points when you spend $3,000 on purchases in the first three months after opening your account.

You’ll also receive 6,000 points every year on your cardmember anniversary. You can earn two points per dollar spent with Southwest and hotel/car rental partners, and one point per dollar on all other purchases. The annual fee of $95 can be claimed as a business expense.

Bank of America Business Advantage Cash Rewards Mastercard

The Bank of America Business Advantage Cash Rewards Mastercard offers cash back rewards for common business spending categories. You can earn 3 percent cash back on spending at gas stations and office supply stores for up to $250,000 in purchases each calendar year. (You’ll earn 1 percent rewards after that.)

In addition, you’ll receive 2 percent cash back on restaurant purchases, and 1 percent on everything else. And you’ll earn a $200 statement credit after making at least $500 in net purchases in the first 60 days of card membership. This card charges no annual fee, and it offers a zero percent APR on purchases for the first nine billing cycles.

What’s your favorite business credit card for sole proprietors? Let us know on Twitter @Revenued_com.

Jennifer Sokolowsky writes about finance, legal and tax topics for publications and companies including The Puget Sound Business Journal, Avalara, and Avvo.
We're working on some pretty cool new pieces of content, including tools that will give you insight into your business finances.

Want to be the first to know when they launch?

Dig Deeper into Business Credit

The Best Banks With a Low-Cost Overdraft Fee

The decision to bank with a given institution could invariably lead to banking issues, and those could muck up the course of your business. So let’s take the topic of overdraft fees head-on, starting with a better glimpse at exactly what they are and how they affect you.

Your One-Stop Shop on How to Build Business Credit

According to the Federal Reserve Bank of New York, more than 50 percent of small business owners who apply for loans fail to obtain them, and it’s usually because of poor business and personal credit scores (or recipients that have been mismatched with lenders).