Guide to business credit cards for sole proprietors

Sole proprietors are eligible for business credit cards and can typically apply without a formal business entity or employer identification number (EIN). Most issuers allow applicants to use their legal name and Social Security number (SSN) during the application process.

If you’re a sole proprietor—whether you run your own business, are a freelancer, consultant or otherwise self-employed—there may be advantages to getting a business credit card—like the ability to earn rewards on eligible spending. 

Keep reading to learn more about business credit cards for sole proprietors, including the benefits, how to apply and what to consider when comparing your options.

What you’ll learn:

• In many cases, sole proprietors can get a business credit card if they earn money independently.

• Business credit cards for sole proprietors can help with separating company and personal expenses, provide an opportunity to earn rewards and, in some cases, help build business credit. 

• Capital One offers a variety of business credit card options, like the Spark Classic, which is geared toward fair credit profiles and offers unlimited 1% cash back with no annual fee.

Yes, if you’re a sole proprietor, you can get a business credit card in many cases. If you earn income independently, there are certain business credit cards you might be able to qualify for. Note that some business credit cards might have certain thresholds that must be met before you can get approved, such as a minimum annual business income.

Even if you don’t have a registered limited liability company (LLC) or corporation, you can consider applying for a small business credit card. Instead of using a business Tax Identification Number (TIN) on a business credit card application, you may be able to use your SSN. Some issuers may also consider applicants with limited or no business revenue, depending on other financial factors.

If you haven’t established a business credit score, the card issuer may require you to provide a personal guarantee, which helps reduce their risk by making you, as the business owner, personally responsible for the debt if your company can’t repay it.

Yes, a sole proprietor can legally use their personal credit card for business expenses, but doing so may complicate finances over time. Your business charges will appear on the same statement as your personal purchases, making it challenging to track costs and manage taxes. 

Plus, using a personal card for business expenses could increase your credit utilization ratio—the amount of revolving credit you’re using relative to your available credit—which may impact your credit scores. And you may miss out on the benefits a business credit card can offer to your company.

Yes, getting a business credit card is useful for many sole proprietors, and there are several advantages it can offer, for example:

One way to promote more organization within your business is to find a way to separate your business and personal finances. Using a credit card specifically for company expenses can give you a record of all your business-specific transactions, which can be particularly helpful at tax time.

Your business credit card may be able to help you establish a business credit score—if payment activity is reported to commercial credit bureaus. And as you use your business credit card responsibly and keep your account in good standing, you can help establish a business credit history to potentially support future financial opportunities.

Certain business credit cards offer rewards that can be earned on every company purchase you make. If you travel frequently, you might earn travel rewards, like miles or points, toward future travel purchases. Or you might earn rewards in the form of cash back to help put money back into your business.

If you have a large purchase to make for your company, such as new equipment, subscriptions or inventory, having a business credit card can help you finance the costs while managing cash flow more effectively.

Some business credit cards offer additional features that are geared toward the unique needs of business owners. While it can vary depending on the card, here are some examples of added business credit card benefits:

• Purchase records and expense tracking

• Digital account management tools

• Elevated travel benefits

• Extended warranty protection

• Roadside assistance

• No foreign transaction fees

• Virtual business cards

If you’re a sole proprietor interested in applying for a business credit card, here are some tips as you move through the application process.

There are a variety of business card options that can suit your company’s needs, including:

• Business charge cards: A key feature of these cards is no preset spending limit (NPSL), which offers greater flexibility in spending. In most cases, this type of card is designed to be paid in full each month.

• Cash back business credit cards: With this type of business card, you typically earn cash back at a set percentage on eligible purchases in the form of a statement credit, check or transfer directly to your bank account.

• Travel rewards business credit cards: Certain business credit cards offer rewards in points or miles that can be redeemed for travel expenses.

When you apply for a business credit card as a sole proprietor, your personal credit score may be considered. Reviewing your credit score can give you a clearer understanding of your financial standing and help you determine which cards you may qualify for. And keep in mind that some business credit cards can affect personal credit if you’re approved, depending on the card issuer.

If you’re applying for a business credit card as a sole proprietor, you may be required to provide the following information:

• SSN—if you’re not using an EIN

• Legal name of the business or your legal name if you don’t have a formal business name

• Annual business income

• Industry type

• Business contact information and address

One way to better understand the business card options available to your sole proprietorship is to get pre-approved before you apply. The business credit card pre-approval process lets you find out which cards you may be eligible for—without impacting your personal credit scores.

The best business credit card for a sole proprietor will depend on your spending habits and credit goals. Before you apply for a business credit card, here are some questions to ask yourself:

• What type of business card do I need? From cash back business credit cards to NPSL cards, you can find the right option to suit your company’s specific needs.

• Should I pay an annual fee? Some business credit cards have an annual fee—especially if they have elevated features. Before applying for a business credit card with an annual fee, analyze your company’s spending habits and determine whether the card’s benefits, rewards offers and spending thresholds outweigh the cost of the fee.

• What’s the rewards structure like? Depending on the business card, there are certain rewards programs—like cash back, points or miles. Determine what your company typically spends money on to find a card that best rewards you for your business spending. 

• What’s the interest rate? As you’re reviewing business credit card options you might be interested in, compare the cards’ interest rates so you can fully understand the cost of borrowing.

• Are there any additional benefits? Different business credit cards offer different benefits and features that you might find valuable for your business. For instance, elevated travel features, enhanced security protections and employee cards are examples of card benefits that could help you move your business forward.

One Capital One Business credit card option for sole proprietors is the Spark Classic. With responsible use of Spark Classic, you can build credit while earning unlimited 1% cash back on all business purchases—without any category restrictions or limits. And with no annual fee, you can take advantage of top-tier benefits, digital tools and security features to help you better manage your business.

Spark Classic is geared toward those with fair credit profiles so you can build a strong foundation as you move your business forward.

If you’re a sole proprietor, business credit cards can be used to separate your business and personal expenses, earn rewards on business spending and potentially build business credit. Take the next step and compare Capital One Business cards today and get pre-approved to see which option best suits your needs—without impacting your personal credit score.