There are certainly pros and cons to owning a small business credit card, and if you’re a sole proprietor running your own show, it’s important to consider both sides before making your decision.

We get it.

Small business credit cards can seem scary, especially for sole proprietors hustling to grow their new business.

On the one hand, small business credit cards can be handy short-term solutions to help get your business off the ground.

On the other hand, there are potential long-term costs.

We reached out to a few experts in the field to pick their brains about small business credit cards for sole proprietors: Should a sole proprietor small business use a credit card?

Here’s what the pros had to say.

In this article:

Do You Need a Small Business Credit Card as a Sole Proprietor?

In short: yes.

Our experts agreed that a credit card could be an excellent tool for small business owners.

But our experts also had caveats for how small business owners should use their credit cards.

Pay It Off Monthly

Cameron Murphey is a licensed therapist running his own practice. He said having a business credit card as a sole proprietor is similar to any credit card — you have to “make sure to pay your business credit card balance in full each month.

Business credit cards have high-interest rates (or APR),” he noted. “You don’t want your credit card balance to grow over time.”

Remember: It’s Not Free Money

Finance expert and founder of Bankdash, Steve Wilson, iterated that business credit cards still need to be used in moderation.

While they can be “a practical approach to cover expenses during months when you don’t have enough cash on hand to pay invoices or when unexpected expenses arise,” they “should not be treated as free money or a tool to spend more money than you have or anticipate getting.”

Why You Should Use a Business Credit Card as a Sole Proprietor

In talking to our experts, they gave several reasons why small business owners — even sole proprietors — can benefit from a credit card.

It Makes Tax Season Wayyy Easier

First, a credit card used strictly for business purchases/expenses gets rid of a lot of headaches around tax season. 

Jayden Doye, CPA and owner of Prestige Account Solutions, said, “Having a separate credit card for business expenses makes it easy to see how much money you’re spending on business-related items, which can be helpful come tax time.” 

Deven Schumacher — founder and Head of Growth for his company SERP — agrees with Jayden:

“If you have a business-related purchase, put it on the credit card. This alone saved me a lot of headaches when I was first starting.”

Jayden also let us know that connecting your credit card to Quickbooks is a pro move that can help tremendously.

So, if you happen to be using Quickbooks to manage your business finances, Jayden suggests connecting your card to it. It’ll make keeping track of your expenses even more manageable.

Pro tTp: Looking for an online scheduling platform that also has built-in payment processing and the reports you need to run your business to the max? Schedulicity has all the tools you need to grow your business — all in one place. Sign up today!

It Can Improve Your Credit Score

Elana Jones of Finance Jar knows that small business owners have a lot to take care of when starting out. 

“Since money is a critical contributor, small business credit cards are often a valuable asset if they’re utilized prudently,” she said.

They “help you build a payment history for your industry.

As a result, paying your outstanding corporate bills on time and maintaining a consistent balance will help you improve your credit score.”

Francis Locknear of The Cost Guys relayed the same piece of advice:

A credit card can “help [small business owners] establish and build their business credit history,” which can ultimately help out “if they need a business loan later on.”

(You can also consider signing up for a virtual credit card service. Since you don’t receive a physical card, you’re less likely to be a victim of fraud due to a misplaced card.)

Pro Tip: Speaking of building your credit history… Using a payment processor can also help improve your credit score, and with Schedulicity, you can integrate your payment processor into your calendar — charging clients right from their appointment!

It Comes With Some Serious Perks

Jeff Neal is a Finance Officer for The Critter Depot, and he made a great point about utilizing the reward points that come along with using a business credit card as a sole proprietor.

“​​We run a small business and use Capital One Sparks Business Credit Card,” he said.

“We get 2% cashback on all purchases. This may not sound like a lot, but this ultimately adds 2% back to our margins.”

Cashback rewards on credit cards can mean a lot to new businesses.

As Jeff Neal told us, “Every small business needs to bootstrap and get creative to increase their margins to stay in business. We find that cashback rewards are a great way to do this.”

What You Need to Apply for a Business Credit Card as a Sole Proprietor

Lastly, we’re turning back to Francis Locknear of The Cost Guys to share a few bullet points on what you need to have handy before applying for a business credit card. 

Francis suggests you have these items ready to go:

  • EIN (Employee Identification Number)
  • TIN (Company Tax Identification Number)
  • SSN
  • Monthly revenue
  • Monthly expenses
  • Number of years in business

Bonus: Recommended Small Business Credit Cards for Sole Proprietors

Our experts rattled off a few of their favorite credit cards for small business owners as well.

So, if you’re on the hunt for a business credit card, these cards can help start your research process.

(Of course, Nerdwallet has a great breakdown of small business credit cards to explore, too!)

Capital One Sparks Business Credit Card: This is the card Jeff Neal of The Critter Depot uses for business purchases, because he gets 2% cash back.

American Express Blue Card: Elana Jones of Finance Jar says many of their clients use the American Express Blue Card because it “allows them to earn 2% reward points on all selected items up to $50,000 annually, then 1%.”

She goes on to say that this card gives [companies] the ability to purchase what it requires at any given time,” adding that “broad purchasing power allows them to spend more than the available credit to assist them in completing tasks.”

Chase Ink Business Unlimited: Francis of The Cost Guys noted the Chase Ink Business Unlimited Credit Card is a great option for solopreneurs.

“If you spend more than $7,500 on your business-related purchases in the first three months you’ve opened the account, you’ll earn a $750 cashback.

You’ll earn an unlimited 1.5% cash back for your business purchases after.”

Plus, Francis says that there’s no annual fee with this card, and you get fraud protection to monitor purchases.

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