Can you apply for a business credit card without a business?

Q: Dear CreditCardGuru, I’ve noticed that a lot of small business cards have better rewards than what personal cards offer. I have a friend who doesn’t have a company, but he still was able to get approved for a small biz card. Does that mean anyone can apply?

A: It is true that a lot of business credit cards give you better rewards. For example, I acquired an American Express Simply Cash card years ago because it offered 3% cash back on gas year ‘round (a clearly better deal than most almost every consumer card).

There are a couple reasons why biz cards tend to give better rewards:

  1. Higher processing fees – Business cards make more money for the banks, because the fees which merchants pay to process them are higher.
  2. Businesses spend more – Compared to the average consumer, a biz card user is probably going to be doing a higher purchase volume.

These are the reasons why banks can afford to be more generous with their reward programs. But can you (an individual) apply for one with no business structure in place?

The sole proprietorship, demystified

A lot of people seem to assume that in order to apply for a business credit card, you need to have an LLC or a corporation. Guess what? You don’t!

You can actually apply as a sole proprietor. What is that? In a nutshell, it means you are the business. There’s no separate entity. If you make any money thru self-employment (or aspire to) then you are actually a sole proprietor, even if you didn’t know it! Here are some common examples:

  • If you’ve sold on eBay or Craigslist, that’s being a sole proprietor
  • Are you having a garage sale? Yep, that’s being one, too.
  • Acting as an freelance consultant
  • Taking online surveys and getting paid
  • Earning money and being paid as an independent contractor, instead of an employee

Even with a full-time job, if you have any kind of pursuit on the side then you are a sole proprietor. This can hold true even if you aren’t yet making money thru your business pursuits.

Conclusion? You can apply for a business credit card without a business entity like an LLC or corp. Because contrary to popular belief, you can be a business entity yourself!

How do you apply as sole proprietor?

A business card’s application is almost exactly the same as a personal card. The information you provide will be the same.

Step 1: Choose sole proprietorship
On the application, you will see a drop-down menu or check box to select how you are applying:
sole proprietor

Step 2: Fill out your personal info for the business info
Assuming you haven’t registered a DBA (“Doing Business As” alias), then you will simply be using your personal name for the business name. For example if your name is John Smith, then you will also enter “John Smith” for the business name. For tax ID, enter your Social Security number.
your business info

Step 3: Fill out your personal info (some info will be duplicated)
Since you are applying for a business card as a sole proprietor, this area will actually involve a lot of duplicate entries. That’s okay and to be expected.
fields for more info

After you fill out the application, read and agree to the issuer’s terms and conditions. It’s that simple!

Are there separate tax forms or paperwork to fill out?

On the bank’s end, they won’t be doing any additional reporting or anything like that. This will feel like a personal credit card account, because nothing will be done differently on the bank’s side.

On your side, If you plan to write off any eligible business purchases made with the card on your tax returns, then that is a separate matter you need to discuss with a tax professional.

Remember that without a business, you are personally responsible

Since you are applying without a separate business entity, that means you will be held personally responsible for account, in the same way you are held responsible with a personal credit card. So just because it’s a business account, that’s no excuse to make late payments, or worse yet, not pay the debt. Because if you do those things, they will hurt your personal credit in the same way as if you did them with a normal credit card.

Click here to see a featured list of business credit cards for small business owners

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

I would imagine that light of the new Durbin Amendment, where merchants have been given the right to refuse card payment on smaller sales, they could refuse to handle your business card for small purchases, where a consumer credit card would be tolerated because of the lower interchange fee charged on consumer credit cards.