Do You Need A Business Credit Card For Home-Based Business?

The deadly pandemic has given us depression, anxiety, and stress. Yet, it has also cleared two things; you can work from home efficiently or run a home-based business successfully. Gone is the concept that you need huge finances and office space to start your creative idea.

In fact, now, the whole world knows even a home-based business can thrive, strive, and survive with the right tips and tools like:

A secured credit card
Proper budgeting plan
Effective business strategies
Comparative & competitive analysis

However, how well you run your home-based business depends entirely on managing the expenses. For instance, what’s your revenue goal, and how can you achieve that by not exceeding your budget.

Yes, using a business credit card can be of great help. However, can you be eligible for it while running a home-based business (HBB)? Let’s find answers!

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Do You Need A Business Credit Card For Your HBB?

It doesn’t matter if you own an online eCommerce business or sell DIY crafts right from your home premises; you can help your finances with a business credit card. Yes, the requirement to get one might differ depending on the type of business you run, but the idea to get one is always appealing.

You might think that you run a small business, so it’s fair to use your personal credit card to manage even your professional finances. Well, if you really think like that, you need to think again. Here’s why it’s the absolute worst idea:

It’s almost impossible to remember and find what’s a business purchase and what’s a personal transaction
You might max out your personal credit card in case of emergency business finances
It’s hard to track, know, and analyze the tax-deductible finances of your business with a personal credit card

There are endless things to consider. However, if you want to keep using your personal credit card to avoid the eligibility criteria to get a business credit card, you must use some tricks.

Don’t put personal purchases on your personal credit card if you want to use it for your home-based business
Make sure you stay within the credit limit and do business transactions that won’t max out your credit card

Yes, it’s good to think and compare all your choices to decide what’s beneficial and not for your home-based business. However, one thing to think through before getting one is whether or not you meet the qualification standard. So here’s what you need to know:

Do You Qualify For A Home-Based Business Credit Card?

You might think of your eBay selling goods, freelancing services, or a DIY crafting hobby as a small home-based business. However, the criteria to be called one may be totally different. ThePointsGuy declares that all the basic business structures are eligible for a business credit card:

Sole proprietorship (Self-employed, Freelancer, & Gig Contractors)
Partnership (General, Limited, Limited Liability, & Limited Liability Limited)
Corporation (C, S, Non-profit, & limited liability)

The eligibility standard is as simple as you can imagine. You don’t need to make millions or own colossal office space to apply for a business credit card.

Common jobs like pet walking, freelancing writer, online painting, graphics, or any sole business owner can apply for the card
You don’t need to build a solid business credit history to get the business card. In fact, your good personal credit score can be enough to make you eligible for the business credit card

So, if your home-based business falls under any of the business structures, then yes, you are fully eligible to apply for the business credit card. And, it’s only a wise decision to get a business credit card for your home-based or corporate business if you want to protect your business in 2022 from all the financial hassle.

Now you know you’re eligible for the card. Next comes how can applying for business credit be different for a home-based business? Let’s find out!

How To Apply For A Home-Based Business Credit Card?

We all know the requirements and the application procedure for a personal credit card. Heck, you might even know the basic steps to apply for a business credit card.

But, are there any differences in the application or procedure if you own a home-based business? What if you don’t have an EIN for your business? So much to know and so less to apprehend. Don’t worry! We’ll answer everything clearly, so you understand what you’re reading.

You need these things to apply for a business card for your home-based business:

Business data: Prepare to provide your business name, contact, location, or any basic yet professional business knowledge needed to claim the ownership.
Personal information: Other than the business information, you might also need to provide your personal data like name, address, contact, salary, etc., to help your business application.
Business period: You need to mention the time your home-based business is running to let the company know what you’re capable of managing.
Business structure: Clear the type of business structure your home-based business falls in. However, study your structure before applying to avoid any bad terms.
Business sale: Show the numerical and documentation proof of your revenue. Ensure your sales meet the eligibility of the business credit card you want to get.
Business spending: Provide the business slips of all the major or minor transactions. It will help them compare what you earn, what you spend, and what you save.
Mortgage/Debt data: The credit card company might want to know about your mortgage/loan/debt history to decide the status of your application. However, it doesn’t decide your eligibility but the approval of your business credit card.
Identification number: This is by far the most crucial yet most confusing part of owning a home-based business. Almost every home-based business owner thinks as he/she doesn’t have an EIN, they can’t apply for the card. However, it’s such bogus talk. You don’t need an EIN if you own a sole proprietorship.

Yes, you can apply for the business credit card by providing your social security or tax identification number. As long as your home-based business doesn’t have many employees, you can apply for the card without an EIN.

Bonus: Click to know how to apply for the Employer Identification Number for your business in Canada.

Why Get A Business Credit Card For Your HBB?

Your small home-based business can grow to become a big corporate organization only if you know how to manage your earnings and spending.

And, getting a business credit card can help you out in the deal. However, the eligibility criteria and application process for a home-based business are vague, which most business owners don’t understand.

A business credit card comes with a massive rewards and bonuses package that can provide your business with the boost and finances it needs to grow. Here are the reasons why you need a business credit card even for your home-based business:

1, Simplify Expense Tracking

You might think your home-based business expenses are easy to manage with a personal credit card. Or, you might skip the idea of getting a business credit card due to your small business reach. However, you should think again due to the following benefits:

You can save your personal credit card from your business blunders
Owning a business credit card can help with the annual business tax

So, are you still thinking if you should get a business credit card? As per the Forbes Advisor statement, you must get it to avail yourself of the profitable welcome business. And, if nothing, avoid looking up the multiple monthly statements to find your business transaction when clearing your annual taxes.

2, Increased Limit Exposure

Your home-based business expenses might range between $2k to $5k, including all the resource materials, delivery, and all that hectic stuff. So, there’s a high chance you must be using different cards to manage the transactions. Heck, you might even be using plastic money to clear the finances.

You might hurt your personal credit score and history while trying to clear your business transaction charges
You’re potentially losing your chances of building a great business credit history that can help your home-based business grow

If you’ve been successfully running a home-based business for quite some time now, you must be familiar with all the sudden and unexpected purchases you had to make. So, get a business credit card now that comes with an increased credit limit, and stop putting your personal credit card at risk!

3, Perks Of Welcome Bonus

You don’t have any business history since you were using cash or your personal credit card for business payments. Relax; it’s not fully a bad thing. In fact, it emphasizes that you’re new to the business card world.

And, not every unknown thing is bad for your future (as long as a business credit card is concerned, of course!). :p

A new business credit account can allow you to enjoy the benefits of a welcome bonus for your home-based business
You might be able to use free travel miles, credit points, and bonus rewards in a dedicated time with your new business card

You can also find new cards with 0% APR, and other business credit offers that can be helpful for your business in many ways.

4, Build Business Credit

Have you heard of the perks a good credit score can give you in endless situations? Yes. So, the case is also similar to a business credit card.

And, no, it doesn’t matter if you own a home-based business or corporate structure company. The perks for both types remain the same, more or less.

Getting a business credit card for your home-based business can allow you to build your business credit score
A good business credit score can help you get the business loan for your small business allowing you to take it onto a large-scale company

According to ForAFinancial, you have no idea how a business credit card and business credit can make a hell of a difference in the insurance premium and loan interest rates.

5, Form Business History

Your business credit card will have all the evidence and proof of your professional finance management, which can come in handy for your future business plans. Of course, unless you’re thinking of running a small-scale home-based business your entire life.

Building a perfect business history with your business credit card can help you attract investors
You can get huge financial opportunities for your business with a good credit history

Just as a good credit report shows the lenders your worth, similarly, a good business credit history and the report will prove to the investors your business is worth the money.

6, Business Emergency Planning

Suppose an unexpected situation struck your home-based business, and you can no longer run it in your personal space.

Now, you need finances and a space to continue your small business. Now, if you were using your personal credit card to manage your business finances, it would be nearly impossible to get good loan rates or even funding.

However, if you had the insight to separate the personal and business expenses or the knowledge and understanding to build good business credit and history, you’ll face fewer obstacles.

Your business credit can allow you to apply for funding, investments, or anything helpful to keep your business going forward
You might even get a discount on certain things if you had maintained a good history

Bottom Line

Most home-based owners still don’t know the answer to the basic question: Do their small-scale businesses even need a business credit card? We get it. Their competitive market is small, the revenue is not that fruitful, and the spending seems fine too.

However, they don’t know the insurance premium deals, monthly/weekly rewards, spending bonuses, and other loans they can get with just a business credit card.

We have curated this comprehensive guide to answer all your questions. So, give it a read and decide why you need to get a business credit card asap!