Robbi Gunter is a staff writer for Strong Business Credit, a free educational web resource for small business owners and businesses seeking to obtain business financing and credit cards.
The phrase "business credit card" is one of the most populat keyword searches on the internet. Every small business owner needs to have a credit card to do business transactions. Having the business credit card in the name of the business rather than in the personal name has advanatages.
Early on, a small business may not be eligible for a small business credit card. Later on, the credit score for the small business may be a hindrance to obtaining a business credit card. A secured business credit card requires that you pay a specified amount of cash on the account before you can use it. You then use the business credit card as you would any other business credit card, sending the payment with your monthly statement. The initial deposit you made on the account is not used to pay the balance of the business credit card unless you default on the payments. Specific secured business credit cards exist to help a small business build or repair its small business credit score.
A true business credit card is a line of credit that is taken in the name of the business, under the business' credit. Activity, whether good or bad, is reflected on your business' credit report through D&B and other financial institutions, and the liability for any debts incurred and bills owed is with the business.
However, some companies out there offer "business" credit cards which they require a person guarantee for. These institutions will often ask for a personal guarantee, and will almost always ask for a social security number from the person applying for the business credit card. If this is the case, the credit card is not a business credit card, but is simply a personal credit card which is used for the business. The business is not liable for bills and debts - you are.
When applying for a business credit card for your business, watch out for areas asking for your SSN (and not your TaxID orEIN) and be wary of any business credit card that asks for a personal guarantee. By ensuring that your business credit card is in the name of your business, you can help to build your business' credit, while avoiding creating problems with your own personal credit.
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