Is Your Side Hustle Eligible for a Small Business Credit Card?

So you picked up a side hustle and it’s paying off, or you’re ready to start a little something on the side. You are not alone. In fact, one in three Americans (about 34 percent) have a side hustle. For many of these hustlers and gig workers, having a business credit card helps keep their business-related expenses organized, earns them valuable rewards and even adds some legitimacy to the work. But do you meet the eligibility criteria for a small business credit card? Should you get a business credit card for your side hustle?

The good news about a business credit card for your side hustle is that requirements are relatively minimal. But you still have to pay it off, no matter what happens to your side gig business. Learn how and why a small business credit card can benefit your side hustle.

Small Business Credit Card Requirements

You might be surprised to realize how easy it is to qualify for a small business credit card for your side hustle. You won’t need a business credit history or even proof of ever making a profit. And even if you haven't incorporated your side hustle as an LLC yet, you can still be eligible for a business credit card.

What you will need to apply is a personal guarantee and a solid credit score. The personal guarantee means that if your side hustle business goes under, you will be the responsible party for paying the credit card. 

Here's some of the information you'll be required to provide in order to prove your eligibility for a credit card. Have this info ready as you fill out applications.

Small Business Credit Card Success Tips

As you're searching for the best business credit card — and using it for the first time — follow these best tips for setting yourself up for success with a business credit card.

Keep Personal and Business Purchases Separate

Once you pass the $600 profit threshold with your side hustle, you’ll need to start paying side hustle taxes. Tracking what you spend on your business can become much easier when you have a small business credit card set aside just for your business expenses. Some business credit cards make it simple to download all of your records into a PDF or use with accounting software. 

Nobody wants to owe more taxes than they’re legally required to pay. When it comes to a side hustle, deductions will play a big part in ensuring you don’t. One of the biggest benefits of having all business expenses separate from personal expenses will be to help you keep track of deductions on all eligible purchases made for your business.

The key to determining whether a business credit card is right for your side hustle is to understand how much you spend on your business and what is eligible for tax deductions. Deductions can include: 

• Business meals
• Travel expenses
• Items purchased for your home office
• Marketing costs
• Office supplies 
• Fees and interest charges on your business credit card

Know Your Rewards

One of the key differences between a small business credit card and a personal credit card is the reward system. Business credit cards often come with more robust rewards programs that focus on providing incentives to businesses. Think: travel rewards, cash back and credit toward office supplies.

When deciding on the right business credit card for your side hustle, look at the types of items you spend the most on and try to find a business credit card that has rewards that align with your spending.

For example, if you travel often for training, you’ll be looking for a business credit card that offers hotel rewards, airline miles or even access to an airport lounge. If you’re driving a rideshare service on the weekends, a business credit card with gas rewards or cash back will be the best match. If you’re a crafter selling and shipping items through Etsy or Ebay, then an office supply reward system might work best for you.

In the End, You're Responsible 

Even if your side hustle is with an employer or a big corporation, you will ultimately be the one responsible for paying your debts on your business credit card. So if your side hustle doesn’t pan out, those credit card bills will continue to come in, and you’ll be the person responsible for paying them.

While there are some accounting benefits and the potential to earn rewards, any business credit card will also come with risk. If you don’t have the personal credit score to qualify or if you don’t feel comfortable providing that guarantee, you can operate your side hustle just as successfully without a business credit card for now.

Just remember to keep very detailed track of your business expenses and consider hiring a tax professional to help if things start to get complicated. If you have startup costs to account for, it’s wise to pay with cash rather than using a credit card as a source of funding.

Looking for an investor? Peer-to-peer lending or simple crowdsourcing can be an option to get your side hustle started and a fun way to hold you accountable and begin marketing your side hustle business. 

Getting a Business Credit Card as a Side Hustler

There are so many business credit cards available to side hustlers and gig workers, that just conducting an initial Google search might be too overwhelming at first. Once you identify the reasons for a business credit card and find the rewards system that would be most beneficial to your side hustle, you will want to search out reputable sources that rate and recommend business credit cards. Our partner, CardRatings, has a comprehensive list of the top credit cards for businesses in 2022 that will be an excellent place for you to start.