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What’s the big deal?
As with any hobby or interest group, you have people who approach it with a black and white version of ethical standards, people who dance in the grey areas, and the line jumpers who run over the line with no regard for the consequences. I think business credit cards can lead many towards ethical questions in this area, especially for those who have a clear black and white view of their ethical boundaries.
Can I get a business credit card without a business?
Yes, and no. This is one that I struggled with for awhile because I was anxious about taxes. I had to learn that while the banks may classify and accept my side hustle as a business, the US Government may not. Therefore, this had no bearing on my taxes. So, yes, you do need some form of income coming in to determine a business for the bank, but you do not need a business that makes enough money to report separate taxes to the US Government. If you’re wondering what businesses may qualify, check out this article.
Can I spend personal spending on a business credit card?
Yes, and no. Are you sick of that answer yet? The truth is, the banks do not care how you spend your money on your card. If you are using your side hustle to qualify for this card and you are tracking your personal and business spending separately, you are good.
The area that makes me nervous with this particular question is if you have a large and legitimate business. The only area I have seen people maintain caution here, is the mixing of personal and business expenses becoming a legal matter later on. There is a chance that if someone were to sue your business, they could look at the mixing of your expenses in an account, and come after you personally. Now, I am not a lawyer and I have spoken with several people who think there is no way this would hold up in court. But, I want to give you all the info, and in my research this was the biggest drawback to blending expenses that I saw.
But what about my taxes? Will this screw them up?
This shouldn’t mess with your taxes. If you have a business that makes enough to report, you should be separately reporting your business expenses. If you are pulling a side gig that is under reporting limits, you should be fine.
The biggest tax issue I have seen has come down to referrals. We utilize referral links to refer friends and family to our credit cards. These are seen as taxable income. You will see, come tax time, a 1098 for your referrals in each account you have referred from.
Can I ethically get a business credit card without a business?
This is entirely up to you. But, as long as you have an income producing side-gig, I would say, let the banks decide. Report your income honestly and appropriately, and allow the powers that be to make the decision on whether you should receive the business card. We would love to show you how to apply for that business card HERE!
