Reader Q: “Do I need an EIN or Tax ID to apply for a Business Rewards Card?”

Posted by Noob Master on Mar 2, 2012 in business credit cards, Credit Cards, Uncategorized | 2 comments

Heck no.

Noob reader, Kim, emailed me asking if she needed to be incorporated to apply for the Ink Plus® Business Card or Ink Bold® Business Card. The quick answer is NO.

Lets dig deeper.  

I often talk about maximizing your miles earning potential by adding business cards to your application schedule. There are a number of reasons why this makes me as happy as a bowl of ice cream. Two big reasons are:

1. When you apply for a business rewards card the banks will do an initial hard pull on your PERSONAL credit. This results in a 2-5 ding on your credit. Your credit score will easily recover from this initial ding. After you are approved for the card, the credit limit and account history will be tied to the BUSINESS credit account. This minimizes any negative impact of creating a new account (shortening your account history) or closing a credit account. Since you are minimizing the credit impact, you are able to apply for more personals cards if you desire. And I do.

2. Most cards have a personal version and a business version. This is marvelous, because if you apply for both cards you are combining the miles to really have award redemption flexibility. For example: I applied for the Chase Sapphire Preferred® (personal) card and received 50,000 Chase Ultimate Reward Points. Great. But it gets better.

To truly maximize my Ultimate Rewards points, I then applied for the Ink Bold® Business Card (business) for another 50,000 points. I now have over 100,000 Ultimate Rewards points for signing up for two credit cards. Redic. I waited 3 months in-between applications, but I have consulted many people who received both in a month or even on the same day. In most cases, they hadn’t applied for a Chase credit card in over 3 months, so they were ripe.

Ok, Ok, I get that there is definite value in applying for both personal and business cards- but can I sign up for a Business card?

The answer is “yes.” It may be easier (not always) to get a business card with an EIN, but you don’t have to have an EIN to apply. You can simply apply as a Sole Proprietor. There are many different ways you can qualify as a sole proprietor. Have you ever sold anything on Ebay or Craigslist?  Are you a musician or artist? Do any consulting, freelance writing or web designing? How about a start-up? Many people have ideas for start-ups everyday and need a way to separate the costs. These are all justifiable and make it easy to explain why you need to SEPARATE spending. Below are the simple steps for applying for a business card as a sole proprietor.

1. Use your personal name as your business name.
2. Be honest with your Biz income. If it’s $0, then put $0.
3. Use your social security number instead of a Tax ID. With Amex, leave the EIN box blank.
4. Be ready to explain why you’re applying for a business card.
5. Some banks will want you to provide documents as proof of address. Don’t fret. You can send in your personal bank statement, utility bill, or phone bill. If you want, you can open up a DBA bank account. Not necessary, but it doesn’t hurt.

CitiBank Disclaimer:

Citi has recently been making it harder for people AND businesses to get their American Airlines branded cards. I got rejected 6 months ago (oh, the shame) and I’m in the process of fighting for my last application. I have great credit and a Tax ID number! I have had to write letters to their executive department and fax copies of my articles of incorporation and proof of my business address. The same docs that Chase accepted, Citi is rejecting. Point is, don’t apply for the Citi AA business card unless you are ready to fight it out.

If you do have a business and you aren’t already running your expenses through a rewards credit card, I say “foolishness.” Think about all the gas, office supplies, and inventory you could be earning miles on. Many business cards also have bonuses tied to them. For example the Chase Ink Bold gives you 2x bonus on gas and 5x on cable and internet!

There you have it. All the information you need to start applying for business rewards cards. Adding business cards is a tremendous way to start seeing your miles balance add up and free up your personal credit for more personal accounts.

— Noob Master