How to Easily Get a Business Credit Card for Your LLC & Why It’s Worth It
Today, we’ll talk about how to get a business credit card for your LLC.
Let me guess.
You’re running an LLC, working hard to grow your business…
But you’re still using a personal credit card to pay for everything from software subscriptions to those must-have client dinners.
Sound familiar?
If so, time for a change.
A lot of business owners stick to personal credit cards without realizing they’re leaving money—and opportunity—on the table.
Good thing? Setting up a business credit card for your LLC isn’t just easy; it could be one of the smartest moves you make this year.
Here’s why:
- A business credit card helps you build a credit history for your LLC (so you can qualify for loans, better rates, and perks down the line).
- It makes tracking expenses and claiming deductions way easier.
In today’s post, I’m going to break down the exact steps to get a business credit card for your LLC.
Plus, I’ll share a few powerful tips most people don’t know about using a business credit card strategically to help your company grow faster.
Why Choose an LLC Over Other Business Structures?
If you are wondering, why does having an LLC make a difference?
Let me explain.
When it comes to business structures, there are a few common types:
- Sole Proprietorship
- Partnership
- Corporation
- Limited Liability Company (LLC)
Here’s how an LLC stands out from these other options:
1. Sole Proprietorship vs. LLC
A sole proprietorship is the simplest business structure. In a sole proprietorship:
- There’s no legal separation between you and your business.
- You have personal liability for all business debts, meaning creditors can come after your personal assets if things go south.
In contrast, an LLC provides liability protection. If the LLC runs into financial trouble, your personal assets (like your house or savings) are generally protected from creditors.
2. Partnership vs. LLC
A partnership involves two or more people who share ownership and responsibilities. Like a sole proprietorship:
- A partnership doesn’t separate personal and business liabilities, so partners are personally responsible for debts.
An LLC, on the other hand, can be structured with multiple members (like partners) while still shielding personal assets from business debts. Plus, an LLC allows flexible profit distribution among members, while partnerships have stricter rules.
3. Corporation vs. LLC
Corporations (like C-Corps and S-Corps) are more complex, with a rigid structure and extensive paperwork. They offer liability protection but come with formalities like shareholder meetings, detailed reporting, and double taxation on profits.
An LLC combines the limited liability of a corporation with the tax benefits and flexibility of a partnership. With an LLC, you can choose to be taxed as a sole proprietor, partnership, or even an S-Corp, making it one of the most flexible structures.
Why This Matters for Your Business Credit Card
The LLC structure gives your business a separate legal and financial identity. This means:
- You can build business credit under the LLC’s name instead of using your personal credit.
- Liability is limited, so if your business defaults, creditors can’t go after your personal assets.
- It’s easier to keep personal and business finances separate, which is especially helpful during tax time and makes tracking expenses a breeze.
So, if you’re serious about growing your business and protecting your personal assets, an LLC is a solid choice.
Why Get a Business Credit Card for Your LLC?
Before we even talk about how to get a business credit card, let’s cover the why.
I know a lot of people think:
“I’ve got my personal credit cards, so why bother?”
And I get it.
But separating personal and business finances with a dedicated business credit card has a ton of perks.
Builds Business Credit
First off, a business credit card builds your business credit score.
Why does that matter?
A strong business credit score makes it easier to:
- Qualify for loans
- Get better terms on financing
It’s like creating a financial identity for your business. Your LLC may be a separate legal entity, but it needs its own financial track record to grow.
Your LLC may be a separate legal entity, but it needs its own financial track record.
Keeps Personal & Business Finances Separate
This is essential for anyone who wants to stay on the IRS’s good side.
Mixing personal and business expenses can get messy, especially at tax time. Plus, it’s easier to see how much money the business actually makes and spends each month.
Special Perks and Rewards
Business credit cards often come with unique rewards.
Some cards let you earn higher points on categories like:
- Office supplies
- Travel
- Social media ad spending
These are things you’re likely already spending on for the business.
Now that we’ve got the “why” out of the way, let’s talk about how you can easily get a business credit card for your LLC.
Good Read: The Complete Guide To Getting a Chase Business Card
Step 1: Make Sure Your LLC is Registered and Ready
The first thing you want to do is make sure that your LLC is properly registered.
If you’re just starting out—or maybe you’re a sole proprietor thinking about forming an LLC—go ahead and get that setup squared away first.
This means:
- Registering with your state
- Getting an EIN (Employer Identification Number) from the IRS
Think of the EIN as your business’s social security number—lenders use it to look up your LLC’s creditworthiness.
Here’s a tip:
A lot of people don’t know this, but having an EIN isn’t just a legal requirement for many banks. It actually makes it easier to get approved. Some banks might even require it.
Step 2: Review Your Personal Credit Score
I’m aware we’re talking business here, but your personal credit score matters too—especially when your business is just getting started.
The reason is simple: most banks want to see your personal credit history before they lend to a new LLC. This is why they call it a “personal guarantee” on your business credit card.
So, if your personal credit score is on the low end, maybe under 670, you might want to work on building that up first.
And no worries if your credit score isn’t perfect. Some cards are more lenient than others and may focus more on your business’s future earning potential rather than solely on your credit history.
But, if you’re eager to boost your credit score, check out this helpful article on how credit repair companies can assist with improving your credit score.
It breaks down the process and shows exactly how they can help fix credit, step-by-step.
Step 3: Choose the Right Business Credit Card
Alright, so now let’s talk about picking the right business credit card.
There are a few things you want to keep in mind here because not all cards are created equal.
Here’s a breakdown of some things to look at:
Rewards Program
Does the card offer rewards in areas where you’ll actually use them?
For example, if you’re traveling for work, look for a card with higher points or miles on travel purchases.
Spending on advertising? Find a card with cash back or points in those categories.
Introductory APR
Some business cards offer an introductory 0% APR period. This can be helpful if you’re planning on making a big purchase soon—maybe some equipment or inventory—and need a few months to pay it off without extra interest.
Annual Fee vs. No Annual Fee
Some cards have no annual fee, which is great if you’re just starting out. But if the card offers premium benefits, like travel credits, hotel upgrades, or better cash-back options, the annual fee can be worth it.
Credit Limit
Take a look at the credit limit the bank is willing to give.
Many business credit cards offer higher limits than personal cards.
Having that extra credit can give your business more flexibility, especially during those times when cash flow is tight.
Step 4: Gather Your Documentation
Alright, so this part is pretty straightforward, but it’s good to have all your ducks in a row before you start applying. Here’s what you’ll likely need:
- EIN or Social Security Number: The bank needs one or both to verify your identity and creditworthiness.
- Business Name and Address: Make sure this matches your registration records.
- Revenue and Expenses Information: Some banks will want to know how much your business makes and spends. If you’re just starting, estimate what your revenue and expenses will look like.
- Time in Business: Some cards will ask how long you’ve been in business. Even if you’re new, don’t worry – many lenders offer cards specifically for startups.
Step 5: Apply and Be Ready to Provide a Personal Guarantee
Here’s the part that might surprise some of you.
When you apply, you might be asked to sign a personal guarantee.
This basically means that if your LLC can’t pay back what it owes, you’re personally responsible.
Now, why does this matter?
Well, when you sign a personal guarantee, your personal assets are technically on the line.
That’s why it’s important to read the terms and understand what you’re signing.
That said, if you:
- Use the card responsibly
- Pay your bills on time
- Manage your cash flow well
You’re building up a positive credit history for your LLC, which can eventually lead to getting rid of that personal guarantee.
Bonus Tips to Keep In Mind
Let me throw in a few extra tips here.
These are things I’ve noticed a lot of people don’t usually know or don’t take advantage of:
Authorized Users Can Help Build Credit
If you have employees, you can add them as authorized users on the business credit card. Just make sure they’re responsible! Every purchase they make on that card contributes to the LLC’s credit profile.
Know Your Card’s Reporting Policies
Not every business credit card reports to business credit bureaus, so make sure the one you choose does if you’re trying to build credit. Cards that report to agencies like Dun & Bradstreet or Experian Business help establish your LLC’s credit profile.
Take Advantage of Business-Specific Perks
Some business cards offer perks like discounts on software or services, business coaching, or even exclusive events. Keep an eye out for these. They can offer savings or networking opportunities that aren’t available with a personal card.
Using Your Business Credit Card Responsibly
Alright, now that we know how to get a business credit card for your LLC, let’s talk briefly about using it wisely.
Having a card can help with cash flow, sure, but it’s easy to get in over your head if you’re not careful.
Avoid Over-Relying on Credit
It’s tempting to treat a high credit limit like free money, but keep in mind that it all has to be paid back.
Use the card for essential business expenses, not every single purchase.
Keep Balances Low
This isn’t just about staying out of debt—keeping your balances low (ideally under 30% of your limit) helps improve your business credit score. If you pay off the card every month, you’re building up positive history without racking up interest.
USE Rewards Without Overspending
Use rewards wisely.
For example:
- Use cash back for office expenses.
- Redeem travel points to reduce business trip costs.
But remember: rewards are only beneficial if you’re spending within your means. Overspending to earn rewards can backfire, so understanding your own spending habits is crucial.
This is where financial behavior plays a big role.
If you’re interested, check out this article on why personal finance depends on your behavior, which explains how spending habits impact financial health.
The Long-Term Benefits of a Business Credit Card for Your LLC
So you’ve got your card, you’re managing it well, and you’re building up your business credit.
Here’s what you’re setting yourself up for in the long term:
- Better Access to Loans and Financing: Down the road, if you need a loan, having a good business credit score will get you better interest rates and terms. You might even be eligible for loans without a personal guarantee.
- More Business Opportunities: A strong credit history can make it easier to work with larger companies, partners, and vendors who might check your LLC’s credit before doing business with you.
- Financial Flexibility: As your business credit grows, you’ll have a bigger cushion for emergencies, investments, and even expansions.
FAQ: Business Credit Cards for LLCs
1. Can I get a business credit card for my LLC with no credit history?
Yes, it’s possible! Some business credit cards are designed for new businesses and may be more lenient about credit history. However, you may need to rely on your personal credit score as a factor. Consider options like secured business credit cards, which require a deposit but help build credit for your LLC from scratch.
Recommended Article: How to Get Startup Business Credit Cards with No Credit
2. Do I need to have an LLC to get a business credit card?
No, you don’t need an LLC specifically. Many business credit cards are available to sole proprietors, freelancers, and other business types. However, having an LLC can provide certain legal and financial advantages, such as separating your personal and business liability, which may make getting a business card more beneficial.
3. Will a business credit card affect my personal credit score?
It depends. When you apply, the issuer may check your personal credit, which could cause a small, temporary dip in your score. Additionally, if your business card requires a personal guarantee, late payments could impact your personal credit. However, responsible use of a business credit card can help build both your business and personal credit profiles positively.
4. Can I use my business credit card for personal expenses?
Technically, yes, but it’s not recommended. Mixing personal and business expenses can make accounting more difficult and could even complicate things during tax season or an audit. Always keep business and personal finances separate to maintain accurate records and ensure proper business expense deductions.
5. What’s a personal guarantee, and why do I need it for a business credit card?
A personal guarantee means you’re personally responsible for repaying the credit card debt if your LLC cannot. This is common for newer or smaller businesses without an established credit history. By signing a personal guarantee, you agree to cover any outstanding balance, which lowers the lender's risk.
6. How does a business credit card help build my LLC’s credit?
Many business credit card issuers report your payment activity to business credit bureaus like Dun & Bradstreet, Experian Business, or Equifax Business. Timely payments and responsible credit use help build a positive credit profile, making it easier for your LLC to qualify for loans or other financial products in the future.
7. Do business credit cards have higher credit limits than personal cards?
Yes, typically, business credit cards offer higher credit limits than personal credit cards. This is designed to meet the needs of business expenses, which can be larger and more frequent than personal ones. However, the exact limit depends on factors like your business’s revenue, credit score, and financial history.
8. What’s the difference between a secured and an unsecured business credit card?
A secured business credit card requires a security deposit, which acts as collateral in case of default. This option is great for businesses or owners with low credit or no credit history. An unsecured business credit card, on the other hand, does not require a deposit and is based purely on creditworthiness.
9. Can I add employees as authorized users on my business credit card?
Yes, most business credit cards allow you to add employees as authorized users. You can set spending limits for each employee to control expenses and help build the business’s credit profile. Be sure to monitor employee spending closely, as all charges ultimately affect your LLC’s account.
10. Do I have to pay taxes on my business credit card rewards?
In most cases, cash-back rewards earned on business expenses are not taxable. However, if you redeem points or rewards for travel, gift cards, or other perks, there might be tax implications depending on your local tax laws. Check with a tax advisor if you have specific concerns about how rewards might impact your tax liability.
11. Can I get a business credit card without a personal guarantee?
It’s possible, though rare for small or new businesses. Some established LLCs with excellent business credit histories may qualify for business credit cards without a personal guarantee. However, most small business cards require one, especially for startups, as it lowers risk for the issuer.
12. Will my business credit card report to my personal credit report?
Most business credit cards do not report to personal credit bureaus unless you default on payments. However, some business credit card issuers may report both to business and personal credit agencies, especially if you signed a personal guarantee. Check with the issuer if you want to ensure it only reports to business credit bureaus.
Final Thoughts
So there you have it. Getting a business credit card for your LLC might sound intimidating at first, but trust me, it’s worth it. Not only does it help with cash flow and expenses, but it also opens up doors to bigger and better financial opportunities for your business.
Take these steps, stay organized, and, as always, be smart about using credit. A little planning now can mean big things for your LLC’s future.
If you're serious about getting your business credit card application approved, make sure your credit is in the best shape possible.
Partnering with a credit repair expert can help you boost your score fast. Contact ASAP Credit Repair today and take control of your financial future!
Thanks for staying till the end, and I’ll catch you in our next article.