• Mashum Mollah, CEO at Blogmanagement.io


• 11.12.2022 06:30 pm
#creditcard

How to Get a Credit Card for Your Startup Business

So, you've got a great business idea and are ready to start. Congratulations! The first step in getting your business off the ground is to apply for a credit card.

But wait - what kind of credit card should you get? And how do you even go about applying for one?

Don't worry, we're here to help. In this article, we'll walk you through everything you need to know about getting a credit card for your startup business.

Credit Card Application for Business

The first thing you'll need to do when applying for a business credit card is to gather the essential information. While this may take some time, it's important to have all your ducks in a row before applying. You'll need to provide the following:

• Your business's Tax ID number: This is also known as an Employer Identification Number (EIN). You can apply for an EIN online through the IRS website.
• Your business's name and legal structure: Are you a sole proprietor? LLC? Corporation? The business type will determine which credit cards you're eligible for and what documentation you'll need to provide.
• Your business's address and phone number: This is where the credit card company will send your new card.
• Your business's start date: Many business credit cards require that your business be up and running for at least six months to a year before you're eligible for the card.
• Your business's annual revenue: This is how much money your business brings in annually. The credit card company will use this number to determine your credit limit.
• Your name and contact information: The credit card company will need to know who you are and how to reach you.
• Your industry: Some business credit cards are geared towards specific industries, such as travel or retail. Knowing your industry will help the credit card company determine which card is right for you.

After you've gathered all this information, you're ready to start filling out credit card applications!

How to Pick a Business Structure

One of the first things you'll need to do when starting your business is to choose a business structure. This will determine which credit cards you're eligible for and what documentation you'll need to provide. Here are some of the most common business structures:

• Sole proprietorship: This is the simplest and most common type of business structure. If you're a sole proprietor, you'll need to provide your Social Security number when applying for a credit card.
• LLC: A limited liability company (LLC) is a business structure that offers personal liability protection. The LLC will shield your assets from seizure if your business is sued. When applying for a credit card as an LLC, you'll need to provide your business's EIN.
• Corporation: A corporation is a legal entity separate from its owners. This means that the corporation itself can be held liable for debts and lawsuits. When applying for a credit card as a corporation, you'll need to provide your business's EIN.
• Partnership: A partnership is similar to a sole proprietorship but with two or more owners. When applying for a business credit card as a partnership, you'll need to provide all the partners' Social Security numbers.

Now that you know what information you'll need to apply for a business credit card, it's time to choose the right card for your business.

Choose a Business Credit Card

Selecting your business credit card can be a daunting task. With so many options on the market, it's hard to know which card is right for you. Here are a few things to consider when choosing a business credit card:

●Annual Fee

Some credit cards come with an annual fee, while others don't. Starting out, you may choose a card with no annual fee to save some money. But cards with annual fees often have more perks, such as rewards or cash back.

Whether or not these perks are worth the annual fee is up to you. You may also be able to deduct the annual fee as a business expense, so make sure to talk to your accountant.

●Rewards

Cash-back points, travel miles, and other rewards are a great way to save money on business expenses. You can use these rewards to offset the cost of travel, office supplies, and more. When choosing a business credit card, compare the rewards each card offers.

Often, rewards may look really attractive, but you still need to think critically. Rewards may distract you from the card's benefits and drawbacks. So, read the fine print before signing on the dotted line.

●Interest Rate

The interest rate is the fee you're charged for borrowing money from the credit card company. If you carry a balance on your card from month to month, you'll be charged interest on that balance. When comparing business credit cards, pay attention to the interest rate.

Some cards have a 0% intro APR, which means you won't be charged interest on your balance for a certain period. This can be helpful if you need to finance a large purchase or you're just starting and don't have the cash flow to pay off your balance immediately.

●Balance Transfer Fee

A balance transfer fee is a fee for transferring a balance from one credit card to another. This fee is usually around 3% and can add up quickly. If you're considering transferring a balance, factor in the balance transfer fee.

●Foreign Transaction Fee

If you do business internationally, you'll want to avoid a credit card with a foreign transaction fee. This fee is charged on all purchases made outside the United States. It's typically around 3%, so it can add up quickly if you're making a lot of international purchases.

●Travel-friendly Features

If you're doing a lot of traveling for business, you'll want to choose a credit card with travel-friendly features. Some cards offer free checked bags, priority boarding, and travel insurance.

Moreover, you can avoid complications with payments overseas by selecting a credit card that doesn't have a foreign transaction fee. In this case, Visa and Mastercard are usually your best bet.

●Employee Cards

If you have employees, you may want to get them their business credit cards. This can help you keep track of expenses and ensure that only business-related purchases are being made.

Certain credit card companies offer employee cards for free, while others charge a small fee. Make sure to compare the fees and benefits of each before making a decision.

●Free Bookkeeping Tools

Small businesses often experience bookkeeping problems due to a lack of resources. Fortunately, some business credit cards offer free bookkeeping tools to help you keep track of your expenses.

These tools can be extremely helpful, especially if you're starting out. Make sure to compare the bookkeeping features of each card before making a decision.

●Credit Reporting

One of the main benefits of a business credit card is that it can help you build business credit. Business credit is important because it can help you get loans and another financing in the future.

Some business credit cards report your payments to the major business credit bureaus, while others don't. If you're looking to build business credit, choose a card that reports to the major business credit bureaus.

How Long Does It Take to Build Business Credit?

The time it takes to build business credit depends on several factors, including payment history and credit utilization.

If you're just starting out, it may take a few months to a year to build up enough business credit to get loans and other financings. However, if you're diligent about making on-time payments and keeping your credit utilization low, you can start to build business credit relatively quickly.

You can do a few things to build business credit faster, including the following:

• Establishing trade lines with vendors: This means you have an account with a vendor, and you pay them on time. The vendor then reports your payment history to the business credit bureaus.
• Getting a business credit card: This is one of the easiest ways to start building business credit. Just make sure to use the card responsibly and make on-time payments.
• Applying for a business loan: This can be a good way to build business credit if you can get approved and make on-time payments.
• Joining a business credit monitoring service: This can help you keep track of your business credit and make sure you're on the right track.

Remember, there are ways to get a credit card with no credit so you can start building business credit immediately. Just research the options and choose the one right for you.

Building business credit takes time, but it's well worth the effort. A strong business credit score can help you get loans, lines of credit, and other forms of financing in the future.

So if you're looking to get a business loan or another form of financing, start working on your business credit today.

Closing Thoughts

You should consider a few things when choosing a business credit card. These include the annual fee, rewards, interest rate, balance transfer fee, foreign transaction fee, travel-friendly features, employee cards, free bookkeeping tools, and credit reporting. By considering all of these factors, you can choose the best business credit card for your needs.