You do not have to have a business TAX ID number to apply for a business credit card contrary to what most assume. If you are an entrepreneur and need a line of credit then a business credit card should be your way to working capital. Start your company the right way even if you are a niche work-at-home mom with no business name.
You may be surprised to realize that as an individual you can take advantage of the good deals and credit benefits offered by a business credit card. Incentives may include a longer than typical 0% introductory APR or balance transfers, rewards points incentives or even gift cards. Overall interest rates may also be quite low. The Advanta card designed for small businesses offers a 7.99% APR, for instance. Most business cards also offer easy online account management, 0$ fraud liability and more. Do keep in mind that many business cards have an annual fee that can be quite costly.
If you are just starting a business, this may help you finance initial expenses to start your new venture. In most cases, even if your business will be a partnership or LLC, you will have personal financial liability for the debts incurred on the credit card. There is no reason not to apply early on in the process of starting your business, even before it is fully legally established. That said, in this instance, a business card can help to maintain financial separation of your business and personal affairs. This step can help to protect your LLC and make for a better tax situation in case of an audit. Businesses must be well established in order to qualify for credit without a personal guarantee.
An individual can function as a business using his or her social security number as a tax ID. This is how a sole proprietorship functions. When applying for the card, simply put your social security number down in both the SSN space and your tax ID number space. A sole proprietorship can be as simple as selling items on e-Bay or doing contract work. You will not need to declare any spending on the card on your taxes, nor will applying for a business card impact your taxes in any way. Applying for credit in this way is totally legal and well within the rules of the card issuer.
Many business credit cards offer a higher limit than personal cards. Also, if you need to access a substantial amount of credit or carry a higher credit limit than might be ideal, these cards are typically not reported on your personal credit report. When choosing business credit cards for personal or business use, consider the same factors you might for an individual card. If you will pay your card in full regularly, a higher interest rate in exchange for better rewards may be reasonable. If you will use your business credit to finance larger purchases, consider seeking a lower rate option.