What do I need to get a business credit card?
From providing a personal guarantee to giving the bank a federal tax ID, here are five answers to the question, “What do I need to get a business credit card?”
- Provide a Personal Guarantee
- Show Your Business’ Feasibility and Profitability
- Have an Excellent Credit Score
- Find Your Employer ID Number (EIN)
- Provide Your Federal Tax ID
Provide a Personal Guarantee
You’re required to provide a personal guarantee for the credit card. The personal guarantee is a legal document that states you will pay for any credit card charges if the business cannot make the payments.
If your business cannot make its credit card payments, the credit card company can legally collect from you. You are required to provide a personal guarantee whenever you apply for a business credit card. Without this guarantee, you won’t be able to qualify for a business card.
Show Your Business’ Feasibility and Profitability
Starting a business comes with many responsibilities, and that includes managing your cash flow. To do so successfully, you will probably need to consider getting a business credit card.
Before you secure one, it is essential to assess feasibility; can you realistically pay off all debts incurred while using one? Knowing this will help ensure that you make the best financial decision for your company in the long run. Acquiring a business credit card may provide an extra layer of financial stability, but it is critical to remain mindful of how much and how often you are making charges on it.
Have an Excellent Credit Score
You don’t need to wait to apply for a business credit card if you need one for a startup, side business, or other unproven venture. You can typically qualify based on your own credit history if you have good credit, which is shown by a credit score of 690 or higher.
That your business or side gig has generated no revenue yet isn’t always a deal breaker. On the application, you can specify this. To determine your eligibility, the issuer examines both your personal and business accounts.
Find Your Employer ID Number (EIN)
A corporate entity is given a unique identifier known as an EIN or Employer Identification Number so that the IRS or Internal Revenue Service can quickly identify it. Employers frequently use EINs for tax reporting purposes.
The number is written as XX-XXXXXXX and has nine digits. Direct applications for EINs from businesses are accepted by the IRS, which typically issues them right away. If you employ people, conduct business as a company or partnership, file specific tax returns, or remove taxes from revenue other than wages, you must get an EIN.
Provide Your Federal Tax ID
To get your business credit card, you must provide the bank with your federal tax ID or EIN. And if you are a sole proprietor and do not have a tax identification number, you must list your social security number. Otherwise, the bank may refuse to issue the card. Federal tax IDs help the credit card issuer verify the business’s identity and its owner. Positive identification is the first step to getting your card. Moreover, the EIN is used to track the business’s credit history and financial activity, which are essential when determining the company’s creditworthiness and establishing the card’s credit limit.
This number is also used to identify the business for various federal tax purposes. Banks use it to report the business’s credit card activity to the IRS, accept tax returns, or make tax payments.
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