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The Requirements for Opening a Business Credit Card


Making the decision to be a small business owner is a huge step, and there are many things to consider, such as whether or not to apply for a business credit card. There are actually steps to take and ramifications to consider when applying for a business credit card (that you may not have thought of). If you don't take the appropriate steps, your personal and business credit may be negatively affected. So, what are the requirements for opening a business credit card?

Name Your Business

It may sound very simple, but it is a vital step in applying for a business credit card; you must name your business. Whatever you choose as a name for your business should be related to what you do, and you should be thinking long term. The name of your business is typically the first impression and is what you will be identified with. Not only do you need to name your business though, you need to go through the proper channels to register your business with the city, state and county where you live.

Form a Business Entity

Once you have your business name, you need to decide whether you will be a corporation or an LLC (limited liability company). Choosing one of these options instead of sole owner or proprietor will protect your personal credit and will allow you to apply for a true business credit card. Again, you must file the appropriate paperwork, as copies are often requested from potential creditors.

Obtain a Business License

Once you have registered a business name, you will need to obtain a business license to operate your business. Even when you work from your home, this is a necessity. You won't be able to apply for a federal tax number without a business license. You also won't be able to apply for a business credit card without a business license.

Apply for a Federal Tax ID Number

In order to apply for a business credit card, you will need to have a federal tax ID number (FIN) or employer ID number (EIN). You can acquire a number for your business from the Internal Revenue Service online or by phone. Having a FIN will allow you to apply for business credit that will not affect your personal credit. Without this number, you will have to use your own social security number and this becomes part of your personal credit score.

Other Requirements

Some other considerations when applying for a business credit card are having a business address and a business phone number. Even if you use your cell phone for business purposes (and have a business voice mail set up), it will be adequate. You may want to consider opening a post office box for business purposes. This keeps your personal credit and life as separate as possible.

Opening a business credit card is not really as daunting as it may seem. Yes, there are a lot of paperwork requirements, but it's important to protect your personal credit while at the same time work to establish your business credit.

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