Choosing a business credit card as a sole proprietorship

Cash flow is among the biggest financial challenges for small businesses—particularly sole proprietorships. That's why it's critical to build a strong credit history and use business credit cards wisely.

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The right credit card can provide funds for everyday business expenses and help you scale your operations. In this guide, we'll discuss the benefits of business credit cards for sole proprietors and offer tips for selecting the right card for your business needs.

Can I get a business credit card as a sole proprietor?

Sole proprietors can get a business credit card using their Social Security number and personal address, even if they don’t have a registered business.

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Most small business owners don’t have the business credit history to avoid a personal guarantee to qualify for a credit card. Some business credit cards for sole proprietors may ask for proof of income during the application process, which you can provide through tax returns or business bank account statements.

Do sole proprietorships need separate credit cards?

As a sole proprietor, it’s a good idea to use a dedicated credit card for business expenses so you can easily track costs and calculate your business tax deductions. Using a personal credit card for business expenses puts your personal assets and credit score at risk and makes it hard to distinguish your personal expenses from business purchases.

Can I get a credit card for a self-employed business?

Business credit cards aren't just for large corporations. A variety of credit cards are specifically designed to cater to the needs of small businesses, even for sole proprietors, freelancers, and gig workers who are self-employed only part-time. 

What to consider when choosing a sole proprietorship business credit card

The best business credit cards for sole proprietors offer low fees, a high credit limit, and low interest rates. Here are some factors to consider when choosing a card:

Fees and interest rates

To avoid paying interest on a business credit card, it's important to pay your balance in full every month. Look for credit cards with no activation, annual, or monthly fees. Compare intro APR rates, regular interest rates, and fees for balance transfers to find the most favorable card offers.

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Examples of business credit cards with favorable fees for sole proprietors include the Blue Business Plus card from American Express and the Capital One Spark 1% Classic for Business, both of which have no annual fees for card membership. If you frequently travel internationally, consider a business credit card with no foreign transaction fees.

Reward options

Consider card providers that offer card rewards, perks, or signup bonuses. Cashback rewards can be lucrative, and signup bonuses provide extra membership rewards when you spend a certain amount within a specific timeframe after your account opening.

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For example, the Chase Ink Business Unlimited credit card offers hundreds of dollars in cashback rewards if you spend a certain amount in your first three months. Alternatively, the Amazon Business Card from American Express is a great option for sole proprietors with lower spending needs who prioritize shopping with Amazon.

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Consider the full range of card membership benefits you’ll get outside of just the card’s rewards program. For example, if you’re planning to make a large business purchase, a card that offers an introductory 0% APR period would be a good choice.

Integrations and automation

Look for business credit cards that integrate with finance automation software to simplify financial tracking, bookkeeping, and accounting processes. As a sole proprietor, you may not have employees or contractors to pay, but you’re still obligated to report your income for tax purposes, which can take hours or even days if you aren’t prepared.

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Discover Ramp's corporate card for modern finance

Learn more

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These systems can save you time and effort by automating tasks like accounts payable and expense reporting. Select a card that integrates with your preferred accounting software, such as NetSuite, QuickBooks, or Sage Intacct. You’ll also want to consider a business bank account or corporate card to help you manage business spending while automating some of these tasks.

Other factors to consider

1. Your credit score: The most attractive small business credit cards require good to excellent credit—typically a score of at least 700. Be sure to check your credit score before applying and narrow your search to cards that offer you good approval odds.
2. Your business expenses: Many business credit cards offer bonus rewards for spending in certain categories. If fuel is one of your biggest business expenses, for example, you should strongly consider getting a gas credit card. Selecting a card that gives you elevated rewards for your most frequent expenses will maximize your benefits.

The best credit cards for sole proprietorships

Chase Ink Business Cash

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The Chase Ink Business Cash is a no-annual-fee credit card designed for businesses. With it, you can earn 5% cash back on up to $25,000 combined at office supply stores and telecom, 2% on up to $25,000 combined at gas stations and restaurants each year, and 1% back on all other purchases.

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New cardholders can earn a $750 welcome bonus by spending $6,000 in the first 6 months. The card offers employee cards, Lyft discounts, and purchase protection. However, there's a 3% foreign transaction fee, and bonus cash back categories have spending limits.

Ink Business Preferred Credit Card

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The Chase Ink Business Preferred is a premium travel rewards card for businesses. It offers 3 points per dollar on travel, shipping, internet, cable, phone services, and advertising (up to $150,000 annually).

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The Chase Ink Business Preferred credit card typically starts with a credit limit of $5,000, but it can vary based on you and your business’s financial situation.

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Ramp Business Credit Card (for future LLCs)

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Once your company is more established, the Ramp Card—and its accompanying suite of business-specific features—is smart to transition to. 

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The Ramp Business Credit Card offers cashback rewards with no annual fee or foreign transaction fees. It goes beyond traditional cards by incorporating advanced expense management tools, which empower businesses to automate financial workflows, control spending, and generate insightful reports.

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Ramp simplifies the application process by eliminating the need for personal guarantees and offering a streamlined approval process tailored to individual business needs. Designed for modern businesses, the card prioritizes simplicity and efficiency. Features like detailed analytics and seamless integration with accounting software help businesses optimize expenses and manage finances effectively while earning consistent rewards.

How to choose a business credit card for a sole proprietorship

As with choosing a personal credit card, it’s important to pick the right business credit card for your sole proprietorship. Consider the following as you research your options:

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1. Your credit score: The most attractive small business credit cards require good to excellent credit—typically a score of at least 700. Be sure to check your credit score before applying and narrow your search to cards that offer you good approval odds.
2. Your business expenses: Many business credit cards offer bonus rewards for spending in certain categories. If fuel is one of your biggest business expenses, for example, you should strongly consider getting a gas credit card. Selecting a card that gives you elevated rewards for your most frequent expenses will maximize your benefits.
3. Membership benefits: Consider the full range of card membership benefits you’ll get outside of just the card’s rewards program. For example, if you’re planning to make a large business purchase, a card that offers an introductory 0% APR period would be a good choice. If you frequently travel internationally, consider a business credit card with no foreign transaction fees.

Benefits of business credit cards for sole proprietors

Even if your business expenditures are limited, there are several advantages to having a business credit card as a sole proprietor:

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• Separate business and personal finances: Business credit cards allow you to track business expenses separately from personal ones, which makes expense tracking easier and more accurate
• Finance larger purchases: Having a business credit card can provide the necessary cash flow to handle large orders and expenses
• Build your business credit score: As a new business, using a credit card that reports to the business credit bureaus helps establish a strong business credit history, proving to lenders that you’re financially responsible
• Efficiently manage cash flow: Many sole proprietors use credit cards for daily expenses to build business credit while ensuring funds are always available for routine costs
• Earn card membership rewards: Rewards programs may offer points or cashback on eligible purchases, like cell phone data plans or purchases at office supply stores and gas stations. If you travel, look for a card that offers business travel rewards and no foreign transaction fees.

‍Many of these benefits come down to time saved. When you keep business purchases separate from personal ones, you spend less time splitting out costs for tracking and reporting. Your business could save hundreds of hours by automating expense reports with the right corporate business credit card.

How to apply for a business credit card as a sole proprietor

Applying for a business credit card as a sole proprietor follows a similar process to applying for a personal credit card. Here are the steps to take:

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1. Do your research: Identify credit cards that are open to sole proprietors, and eliminate those with unfavorable terms
2. Gather required information: Collect necessary documentation such as your tax ID number (either your employer identification number or Social Security number) and financial documents that prove your income
3. Complete the credit card application: Fill out the online application. If you have all the required information readily available, you can fill most out in less than 30 minutes.
4. Wait for results: Some credit card issuers offer immediate decisions, while others require manual review. Once approved, you can use a digital card while waiting for the physical card to arrive.

Can I apply for a business credit card with my EIN?

As a sole proprietor, you can apply for a business credit card with your employer identification number (EIN) if you have one. Sole proprietors aren’t required to have an EIN, but you may want to get one to avoid using your Social Security number when applying for credit cards and loans.

Does sole proprietorship affect your credit score?

If you’re a sole proprietor, applying for a credit card with a personal guarantee can affect your credit score. Your business isn’t its own entity, so many credit card and loan applications will pull from your personal credit history. That leaves you personally liable if your business can’t repay its debts, which impacts your personal credit score.

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If you aren’t approved for a small business credit card right now, you can do a few things to strengthen your application in the future:

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• Reduce the balance on your personal credit cards: The more unused credit reflected on your credit report, the better
• Pay all bills on time every month: Late payments are reflected on your credit report after 30 days and can hurt your score
• Reduce the number of delinquencies and collections on your credit report. Secure a free copy of all three credit reports (Experian, Equifax, and TransUnion) to see what negative reports currently count against you. Dispute any that are inaccurate or incomplete. You can often request removal from your report in exchange for full payment for valid delinquencies or collection accounts.

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» Learn more: How to get and build business credit

Do sole proprietors need business credit cards?

No; a sole proprietor doesn’t need a business credit card. That said, while you can use a personal credit card for business expenses, it's strongly advised against. Mixing personal and business finances can create significant accounting and tax complications. It’s better to dedicate a separate card solely for business use, and ideally, let that separate card be a business credit card so you can start building your business credit history.

Consider Ramp's Business Credit Card once your business is established

Ramp’s corporate business credit cards offer an alternative to traditional business credit cards. If you have an EIN and at least $25,000 in a US business checking account, you could qualify for Ramp.

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Our cards have built-in features that track and report business expenses, while also helping you build business credit. Ramp business credit cards are suitable for all business structures, with unlimited free physical and virtual cards for employees if you decide to expand your team.

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Try our interactive demo to see how Ramp customers save an average of 5% a year.

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