Should I get a business credit card? Or a second personal card?

May 30, 2020 2:51 PM

I’m trying to get better about keeping my personal and business expenses separate. Part of that is looking into getting a credit card solely for business expenses (for easier expense tracking, etc.) but do I need a “business” credit card, or can I just get a second personal card?

Right now I don’t have any kind of entity set up for my business, I just do freelance work that requires equipment, travel, etc. It’s a significant portion of my income but it’s not my primary source of income, and it’s not very much money, as businesses go.

I’m looking into getting a credit card, primarily to help me keep track of business expenses (so, not really to spend tons of money, planning to pay off the balance every month). I’m kind of confused about whether or not a business credit card is necessary or worth it, as opposed to a second personal card that I use for business expenses.

I read a couple of articles online but they mostly read like advertisements for specific cards. I appreciate any personal advice but also links to advice specifically for freelancers & credit cards.

Thanks everybody!

posted by hapticactionnetwork to Work & Money (4 answers total)

Some basics, without specific card recommendations, at nerdwallet. Personal rec: check in with your local credit unions for a business credit card, see the business card offerings with your current personal credit card company if you're happy with them, and (particularly since you don't plan to carry a balance, and travel for work) check out the Chase "Ink" & American Express lines.
posted by Iris Gambol at 3:23 PM on May 30, 2020

I have a small business-that-probably-should-be-a-hobby, and I set up a checking account and credit card for it at a different bank (credit union) than the one I use for personal banking. There's no fee for either and it keeps my finances nicely separated. I looked into business accounts, but they seemed designed for much more use/cash flow than I am generating (or ever will, probably) and had fees to match.
posted by Sweetie Darling at 4:40 PM on May 30, 2020

If you're planning to pay it off every month then interest free days and yearly fee are probably the main things. I look at business cards from time to time and am yet to se anything worthwhile for me. Some rewards might look interesting but you usually have to spend a lot on the card for them to be of any value. If you're not going to be spending large amounts you probably don't need a business credit card.

I pay all the bills in my business, though not that many on card; maybe 3-5 a month. Tracking it on my personal card is fairly easy given that I have to keep receipts and track the spending for bookkeeping/tax purposes anyway. It doesn't really add to my workload. I just pay the credit card out of the business account, allocating the expenses in the transaction and putting the balance of the payment, my personal spending, to owner's drawings. It encourages me to be diligent because I don't want to miss an expense and have it come out of my drawings.

I know it can be helpful to have things in discrete accounts though and by all means if that works better for you. If you get a another card it might also make sense to attach it to a bank account just for that business and then your income can go into it too. That makes life simpler for your accountant as well as you and will mean they spend less time on your stuff.
posted by mewsic at 7:31 AM on May 31, 2020

I had a small incorporated company and did exactly that - a second personal card that I used only for business expenses. It helped keep my accounting nice and clean; I was able to track what I spent for business; and I paid off that credit card directly from the business's checking account (doesn't matter that the card is in my name rather than the business - you can pay off any credit card you want, frankly!). Highly recommend. And as a personal card, as others have noted - lower fees and you can choose from a wider variety of card options.
posted by sonofsnark at 10:10 PM on May 31, 2020