Credits: ChatGPT
For me, credit cards have always represented freedom. The freedom to purchase plane tickets for a last-minute getaway, the freedom to afford an expensive textbook without having to drain my bank account. Now, as a freelance writer just starting out on my own, that same freedom has taken on new meaning in the form of small business credit cards designed specifically for solopreneurs like me.
When I worked at an ad agency, expenses like flights and materials were covered by the company card. But now that Iâm freelancing full time, separating personal and business expenses has become crucial. I also missed out on the points, miles, and cash back that my old corporate card provided.
I am excited by the possibilities that business credit cards offer, but am intimidated by the options. With so many cards advertising rewards and perks tailored to small business owners, how can I know which one is right for me?
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For starters, it helps to understand what sets business credit cards apart from personal ones.
At their core, the two serve different purposes. Personal cards cover day-to-day consumer purchases, while small business cards are specifically for company expenses. When I buy printer paper for my home office, Iâll charge it to my business card. Dinner and a movie with friends goes on my personal one.
Beyond the intended use, there are practical differences, too. Business cards offer features that support entrepreneurs and freelancers. This includes higher spending limits, employee cards, dedicated account management, and tools for tracking expenses.
The reporting is handled differently as well. Personal card activity shows up on your personal credit report, while business cards report to your business credit profile. Building up your business credit score establishes credibility as a company and expands access to funding down the road.
For me, separating business and personal expenses goes beyond convenience. It allows me to recoup costs during tax season and gain insights into my companyâs finances.
Before applying, I was worried about getting rejected for not having an established business. Thankfully, thatâs not typically the case with small business credit cards.
Approval is based on your personal credit score and history, not your time in business or revenue. In most cases, fair to good credit (a FICO score of 670 or higher) is sufficient for acceptance. The better your credit, the more likely youâll qualify for premium cards with higher limits and rewards.
Budding solopreneurs shouldnât shy away from business cards, even if you only freelance part-time. Thereâs no minimum income requirement. As long as you have eligible business expenses you plan to consistently charge to the card, you can qualify.
So what should aspiring cardholders like me look for in a card? With hundreds of options on the market, it pays off to evaluate a few key factors.
Annual fees are the norm with premium travel rewards cards, but not with basic small business options intended for startups and side hustlers. Many of the top contenders for solopreneurs donât carry annual fees at all. You shouldnât have to pay for the convenience of separating business expenses.
Foreign transaction fees are another budget item to watch out for if you plan to make international purchases. Otherwise, they probably wonât be a major consideration.
Of course, rewards are a primary motivator for signing up in the first place. You want value in return for handing over business expenses that used to come out of pocket.
It is partial to cash back since it offers the most flexibility. I can use it to splurge on office equipment or even pad my personal spending budget. But travel perks could make sense for freelancers who are frequently on the road for clients.
When comparing, look beyond earn rates. Cards that offer an elevated percentage in bonus spending categories (like gas, dining, office supplies) are ideal if your purchases align.
Valuable perks beyond rewards, like cell phone protection and travel insurance, can also sway your decision. Think about your spending habits and typical expenses to decide which features would prove most worthwhile.
I avoid lesser-known cards with limited acceptance to avoid hassles down the line. I recommend sticking to major issuers like Visa, Mastercard, American Express, and Discover. Their cards are accepted practically worldwide.
Acceptance goes beyond brick-and-mortar stores. Make sure the card also integrates with your preferred accounting, invoicing, and payment software.
As a brand new freelancer, I decided cash back would provide the most bang for my buck and flexibility to put rewards toward anything I need to grow my business. I charged everything from website hosting fees to airline Wi-Fi to my card, so unlimited 1.5% back on all purchases was the perfect fit.
I wanted the peace of mind of a major issuer with worldwide acceptance and settled on the no annual fee Chase Ink Business Unlimited due to its competitive cash back earn rate. The signup bonus gave me business funds an extra boost during the early days when finances were tight.
Down the line if I take on more client travel, I may consider adding a second card that offers elevated rewards for airfare and hotels. But for now, simple, unlimited cash back gives me the freedom and flexibility I was looking for in a starter business card.
If youâre a freelancer, contractor or side hustler looking to maximize rewards on your business expenses, here are seven top-rated options to consider.
With no caps on rewards, the Chase Ink Business Unlimited makes earning cash back simple on every business expense. The signup bonus covers a decent chunk of early purchases as you build your freelance career.
With its triple points bonus categories, the Ink Preferred best suits freelancers with expenses in travel, shipping, phone bills, and advertising. Points can be redeemed for cash back or transfer partners for maximum value.
For freelancers with diverse day-to-day expenses, a flat 1.5% cash back rate is hard to beat. Bank of America offers it on all purchases with no caps and no annual fee.
Straightforward 2% unlimited cash back gives solopreneurs a high return on every business expense. Valuable employee cards and purchase tracking make managing finances a breeze.
Maximize category bonuses on common expenses like Internet bills and office supplies with the no annual fee Ink Business Cash. Points combine with the Chase travel portal for a 25% boost in value.
In addition to cash rewards, the Wells Fargo Business Platinum offers 12 months of interest-free financing and up to $600 in cell phone protection for freelancers managing expenses.
The Blue Business Plus maximizes rewards for smaller freelance businesses with 2x points on every purchase (up to $50,000 per year). Points can transfer to airline and hotel partners.
The perks donât stop once youâve chosen the ideal card. Youâll also want to adopt smart habits to make sure youâre getting the most from your card.
I recommend signing up for text or email alerts so you donât miss a payment due date. Automating payments through your bank account ensures on-time payments.
Donât leave rewards on the table. Take advantage of any elevated bonus category rates that align with your spending. Rack up signup perks by meeting minimum spend requirements within the promotional periods.
Check your statement often and report any unauthorized charges you donât recognize. Youâll be protected from fraud, thanks to $0 liability with most major issuers.
When you do need support, donât hesitate to call the number on the back of your card. The customer service team can answer any questions that come up about rewards, benefits, and account management.
Review your earnings and fees every 6 months. Make sure the card still aligns with your spending and business needs as you grow. You can always switch to a new one that better suits your expenses down the road.
Finding the right small business credit card can make a big difference for solopreneurs like me. Separating expenses helps at tax time, while earning rewards allows you to reinvest back in your business.
Donât overthink the decision. Focus on a few key factors:
Look for a card thatâs easy to understand, simple to manage, has no annual fee, and boosts your earning ability. Then take advantage of perks like intro APRs and signup bonuses that help launch your new entrepreneurial venture.
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