Capital One Spark Cash Plus card
For most eCommerce operators who aren’t excited by the thought of gaming credit card points, the best business card is the Capital One Spark. The value comes in its simplicity - it offers 2% cash back on all purchases. With it you don’t have to worry about credit card point exchange rates, bonus categories, devaluing points, or any other sabermetrics of credit card points. Another great benefit is that the cash back is treated as a rebate on spend as opposed to income, so the cash back is tax free (not tax advice - speak with your accountant!)
The Spark card wins on simplicity. 2% cash back on all purchases so you can spend more time on what matters - your business.
We spoke with dozens of entrepreneurs using these business cards and spent way too many hours going down the Rabbit Hole of reading Nerd Wallet and The Points Guy articles (for a fascinating look at the history of the modern credit card points industry and the Founder of The Points Guy we recommend this NYT article).
If you’re already going to be spending money as a business, why not benefit by getting some perk in the form of cash back or points? A business credit card will also help you separate the expenses of the business from your personal expenses in addition to offering higher credit limits than personal cards could offer. In speaking with eCommerce operators, many noted credit card cash back and points as one of the best unspoken perks of the job. We know of some operators who have earned as much as 7 figures through credit card rewards from their business!
Simplicity
This card lets you spend more time focused on your business and less time worried about Game Theory Optimal Points Strategy™. 2% cash back on all spend and 5% cash back on hotels and rental cars booked through Capital One Travel (too much hassle in our eyes, but go for it if you want). Business owners loved that they don’t have to think about optimizing their credit card points in addition to every other concern that comes with running a company.
Redemption is easy and you can set your cash to automatically redeem once your balance reaches a certain dollar threshold or at certain dates. Redemption doesn’t require translating points into dollar value equivalents and analyzing the optimal partner to redeem points with.
There is also a $1,000 cash bonus ($500 after you spend $5,000 in the first three months, and $500 after you spend $50,000 in the first six months of account opening).
There are a couple of drawbacks. One is that it is a charge card so your balance is due every month. If you plan on using the credit aspect of a credit card (rolling over your charges at high APR %s), then this card isn’t for you. This card also requires a personal guarantee, so if you have bad credit or no credit, this won’t be the card for you. Check out the cards that won’t require a personal guarantee in our competitors section.
Redemption is a breeze, but there is no option for a direct bank account deposit of your cash back. Instead, a statement credit or check are the easiest redemption options.
The credit card has a $150 annual fee and that’s it. Since it’s a charge card, it will not let you revolve a balance at high APRs.
For the ultimate maximizers the Game Theory Optimal Points Strategy™ likely involves using multiple cards based on unique benefits.
American Express Business Gold Card – This card has a 4X point bonus on ad spend and shipping (two of the highest expense categories for new eCommerce brands) so might be worthwhile to get and just spend on those two categories
Chase Ink – This is the best card if you are excited to play the points game. And lets be honest if you are excited about the points game you will likely have multiple cards because there is no single best and are likely only hate reading this article for its poor advice. All jokes aside, the Chase is a great card if you want to experience First Class flights or five-star hotels as your reward for spending money through your business. You can game these to receive more benefit than the average person.
A brief primer: most credit card points transfer one to one to other point currencies (airline points hotel points etc.) but for some partners the transfer rate could be 8:1 so in a hypothetical example you could transfer your Chase points to Alaskan airlines points for a really cheap First-Class flight to Anchorage.
Corporate cards (no personal guarantee):
Ramp Card – Unlike our recommended card, this card does not require a credit check or personal guarantee and is a true corporate card. Unfortunately, this card is not available for Sole Proprietors. Companies that use ramp love its ability to price compare SaaS pricing to ensure you are getting the best deals. Ramp cards offer 1.5% cash back and have no annual fees. In order to qualify for a Ramp card, you must currently spend more than $10k per month on corporate cards and must have at least $75k in a US bank account.
Brex Card – Similar to the Ramp card the Brex card doesn’t require a personal guarantee and you can apply with an EIN only. However, Brex has recently pivoted away from servicing SMBs so many businesses won’t qualify for a Brex card unless you have raised money from accredited investors. Brex cards offer a point-based reward system.
Parker Card – Parker was designed with eCommerce companies in mind. Parker can be used to finance your business and scales as your business does. eCommerce companies use Parker to finance large spend categories (typically paid ads, inventory POs, and shipping costs). Each day represents its own statement and companies have access to 30, 45, or 90 day lines of credit depending on their size. Stores connect their eCommerce platform (Shopify, Amazon, etc.) to quickly gain access to credit. There’s no interest charges or fees on lines of credit. In order to use Parker, you’ll need 6-12 months of operating history and $10k cash balance. While the cash back amount is only 1%, the ability to finance your business using Parker might be worth it for some.
Co-branded Business Cards:
Marriott Bonvoy Business American Express Card
The Hilton Honors American Express Business Card
These cards are great if you want to get to the highest status of an airline or hotel. Since each dollar translates to an airline mile or hotel point these can be a way to reach an airlines highest status without flying a single mile or a hotels highest status without staying a single night in the chain’s hotel.
Business credit cards are designed for business-related expenses, with liability falling on the business entity. They often offer higher credit limits and rewards for business needs. Personal credit cards, on the other hand, are meant for individual use, with the cardholder personally liable for charges. They come with consumer protections and impact personal credit scores. Business credit cards may impact business credit scores if reported, while personal credit cards solely affect personal credit scores. Using the appropriate card for each type of expense maintains clear financial separation and allows better credit-building opportunities for both individuals and businesses.
We like the Capital One Spark Cash Plus card. Its rewards are dead simple and generous: it gives you 2% cash back on all purchases. Don't waste time tracking bonus categories or navigating points transfer portals. Spend time on what matters - your business.
When a credit card requires a personal guarantee, it means the credit card issuer is asking the applicant, often a business owner, to be personally liable for the card's debt. If the business is unable to repay the debt, the individual's personal assets may be at risk, as the issuer can pursue them to recover the outstanding amount. The personal guarantee provides added security for the issuer and may impact the individual's personal credit score as the credit card activity is reported to their credit report. Careful consideration of the risks involved is essential before agreeing to a credit card with a personal guarantee.
Business credit cards work similarly to personal credit cards but are specifically designed for business-related expenses. Here's how they typically work:
Application: Business owners or authorized employees can apply for a business credit card on behalf of the company. The credit card issuer evaluates the business's creditworthiness based on its financial history, revenue, and other relevant factors. In some cases, the issuer may require a personal guarantee from the business owner, making them personally liable for the card's debt.
Credit Limit: Once approved, the business is assigned a credit limit, which is the maximum amount the company can borrow on the card. This limit depends on the business's creditworthiness and financial standing.
Card Usage: The business credit card can be used for various business expenses, such as office supplies, travel expenses, client entertainment, online purchases, and more. It is essential to keep business and personal expenses separate to maintain accurate financial records and accounting.
Monthly Statements: Every month, the credit card issuer sends a statement detailing the card's transactions and outstanding balance. The business is required to make at least the minimum payment by the due date to avoid late fees and penalties.
Interest and Fees: If the business carries a balance (does not pay the full amount owed) after the grace period, interest charges will apply on the remaining balance. Business credit cards may also have an annual fee and other charges, such as foreign transaction fees or cash advance fees.
Rewards and Benefits: Many business credit cards offer rewards and benefits tailored to business needs. These rewards could include cashback on business expenses, travel rewards, discounts on office supplies, or other perks to incentivize card usage.
Employee Cards: Business credit cards often allow the primary cardholder to issue additional cards to employees. These employee cards usually have individual spending limits and allow for easy expense tracking.
Credit Reporting: Some business credit card issuers report the card activity to business credit bureaus, helping the business build a separate credit profile. This can be beneficial for establishing a strong credit history for the business.
Overall, business credit cards can be useful tools for managing business expenses, improving cash flow, and earning rewards. However, it's crucial for business owners and employees to use them responsibly and ensure that all expenses are appropriate and related to the business operations.
It is not advisable to use a business credit card for personal expenses. Business credit cards are intended for business-related transactions, and mixing personal expenses can complicate accounting, tax reporting, and create challenges in tracking business expenses accurately. Additionally, it may not positively impact personal credit scores, violate cardholder agreements, and potentially jeopardize the limited liability protection for personal assets. To maintain financial separation and avoid potential issues, it's best to use a personal credit card for personal expenses and reserve the business credit card solely for legitimate business-related transactions.
Yes, business credit cards can affect personal credit if they require a personal guarantee or report activity to both business and personal credit bureaus. Responsible use, such as making timely payments and maintaining low balances, can positively impact personal credit. However, late payments, defaults, and high credit utilization on business credit cards can harm personal credit scores. To minimize negative effects, individuals should use business credit cards only for legitimate business expenses, be aware of reporting practices, and manage the card responsibly.
Typically, you need a legitimate business entity to get a business credit card, as they are designed for business-related expenses. However, some small business credit cards may be available to sole proprietors or individuals working as freelancers or independent contractors. In these cases, you might be able to apply using your Social Security Number (SSN) as the TIN and stating your business as a sole proprietorship. Remember that you will still be personally responsible for the card's debt, so it's essential to use the card responsibly, separate business and personal expenses, and be aware of any personal guarantee requirements. Eligibility criteria can vary among issuers, so check with the specific credit card company for their requirements for business credit cards without a formal business entity.
Business credit cards are typically designed for business owners, entrepreneurs, and authorized representatives of a business entity. Here are the primary individuals who can apply for a business credit card:
Business Owners: The owners of a business, whether it's a sole proprietorship, partnership, corporation, or limited liability company (LLC), are eligible to apply for a business credit card in the name of the business.
Authorized Employees: In larger companies, business owners may authorize certain employees to apply for and use business credit cards on behalf of the company. These authorized employees might include managers, executives, or other personnel responsible for making business-related purchases.
Sole Proprietors: If you are a sole proprietor, you can apply for a business credit card using your own name and Social Security Number (SSN) as the Tax Identification Number (TIN). Many credit card issuers consider sole proprietors as businesses, allowing them to apply for business credit cards.
Freelancers and Independent Contractors: Individuals who work as freelancers, independent contractors, or gig workers can also apply for a business credit card using their SSN and stating their business as a sole proprietorship.
Partners in a Partnership: Partners in a partnership can apply for a business credit card in the name of the partnership, using the partnership's TIN.
LLC Members: Members of a limited liability company (LLC) can apply for a business credit card in the name of the LLC, using the LLC's TIN.
It's essential to provide accurate and truthful information when applying for a business credit card. Depending on the credit card issuer, they may request documentation, such as tax returns or business registration documents, to verify the legitimacy of the business entity. Additionally, some business credit card issuers may also require a personal guarantee from the business owner or primary applicant, making them personally liable for the card's debt. Always review the specific eligibility requirements and terms of the credit card issuer before applying for a business credit card.
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