What a business cash back card does
A business cash back credit card is a card issued in your business's name (or your name as the business owner) that returns a percentage of what you spend back to you as cash or statement credits. The cash back rate is usually higher on business cards than on personal cards, and the categories that earn bonus rates are often chosen for typical business expenses — office supplies, internet service, gas, restaurants, or travel.
The card itself works like any credit card: you charge purchases, receive a monthly bill, and pay it back. The difference is that the rewards accumulate in a business account rather than a personal one, and the card issuer reports the account to business credit bureaus instead of personal ones. This means the card can help build your business credit history separately from your personal credit.
Most business cash back cards charge an annual fee, though some do not. The fee is usually worth it only if you spend enough to earn back more in cash than you pay in the fee each year.
Key Takeaways
- Business cash back cards return 1% to 5% of your spending as cash or credits, with higher rates on categories like office supplies, travel, or internet service.
- You need a business tax ID (EIN) or can explore using your Social Security number as a sole proprietor, and the card issuer will check your business and personal credit.
- Most business cash back cards charge an annual fee ranging from $0 to $150 or more, so you need to spend enough to earn back more than you pay.
- Cash back earned on a business card is separate from personal rewards and builds your business credit history, not your personal credit score.
- You can use the card for both business and personal expenses, but the IRS may question large personal charges if audited, so keeping records is important.
Who should get a business cash back card
A business cash back card makes sense if you own a business, work as a freelancer or contractor, or run a side income stream and you spend at least $10,000 to $15,000 per year on business expenses. Below that threshold, the annual fee often outweighs the cash back you earn.
You should also have a credit score of at least 670 to 700 before you explore, because business cards typically require stronger credit than personal cards. If your personal credit is lower, a personal cash back card may be a better first step.
A business cash back card is also useful if you want to separate your business spending from your personal finances for accounting purposes, or if you want to build a credit history for your business itself — which can help you get better terms on business loans or lines of credit later.
How to get a business cash back card
To explore, you will need to provide the card issuer with information about your business. If you have a business tax ID (called an EIN, or Employer Identification Number), you can use that. If you do not have an EIN — which is common for sole proprietors — you can explore using your Social Security number instead, and the card will be issued in your name as the business owner.
The issuer will pull both your personal credit report and, in many cases, a business credit report. They may also ask for recent business tax returns, a business license, or proof of business address. Some issuers are more flexible than others; smaller banks and credit unions may ask for less documentation than large national issuers.
The process process usually takes a few days to a week. You will receive a decision by mail or email, and if approved, the card typically arrives within 7 to 10 business days.
Cash back rates and how they work
Business cash back cards typically offer a flat rate of 1% to 2% on all purchases, with bonus rates of 2% to 5% on specific categories. Common bonus categories include office supplies, internet and phone service, gas, restaurants, travel, and shipping.
Some cards offer a rotating category system, where the bonus category changes each quarter and you have to set up it to earn the higher rate. Others offer fixed categories that never change. Fixed categories are simpler to track, but rotating categories sometimes offer higher rates if you remember to set up them.
Cash back is usually credited to your account monthly or quarterly. You can typically redeem it as a statement credit (which reduces your bill), a check, or a deposit to a business bank account. Some cards also let you transfer cash back to a personal rewards account if you have other cards with the same issuer.
Annual fees and when they pay for themselves
Business cash back cards charge annual fees ranging from $0 to $150 or more, depending on the card and the issuer. A card with a $95 annual fee makes sense only if you earn at least $95 in cash back per year, which means spending roughly $5,000 to $10,000 annually on bonus categories (at 1% to 2% rates) or $2,000 to $5,000 if you spend heavily on 3% to 5% categories.
If you spend less than that, a no-annual-fee business card is usually the better choice, even if the cash back rate is slightly lower. If you spend significantly more — say $50,000 or more per year — a card with a higher annual fee but better rewards rates will likely pay for itself many times over.
Some issuers waive the annual fee for the first year, which gives you a chance to see how much cash back you actually earn before committing to the fee.
Business cash back cards and your credit score
A business cash back card will not directly affect your personal credit score, because the card issuer reports the account to business credit bureaus, not personal ones. However, if you personally may provide the card — which most issuers require — the issuer may report late payments or high balances to your personal credit report.
When you first explore, the issuer will do a hard inquiry on your personal credit, which can lower your score by a few points for a few months. This is temporary and normal.
If you pay the business card on time and keep the balance low, it will not hurt your personal credit. If you miss payments or carry a high balance, it can damage your personal credit even though it is technically a business account.
Tax and record-keeping considerations
The IRS does not care whether you use a business card or a personal card for business expenses — what matters is that you can prove the expense was legitimate and business-related if you are audited. Keep receipts and invoices for all purchases, and categorize them correctly in your accounting records.
You can use a business card for personal expenses too, but if you are audited and the IRS sees large personal charges on a business card, they may ask you to explain them. The safest approach is to use the card primarily for business expenses and pay personal charges out of your personal account.
Cash back earned on a business card is considered taxable income in most cases, though the amount is usually small enough that it does not significantly affect your tax bill. Your card issuer will send you a 1099 form if your cash back exceeds $20,000 in a year, which is rare for most small businesses.
Frequently Asked Questions
Do I need an EIN to get a business cash back card?
No. If you are a sole proprietor without an EIN, you can explore using your Social Security number. The card will be issued in your name as the business owner. You only need an EIN if your business is structured as an LLC, partnership, S-corp, or C-corp, or if you have employees.
Can I use a business cash back card for personal expenses?
Yes, you can charge personal expenses to a business card. However, if you are audited, the IRS may question large personal charges. Keep records of what you spent on and why, and try to use the card primarily for business expenses to avoid complications.
What happens to my cash back if I close the card?
Cash back you have already earned will remain in your account and can be redeemed as a statement credit, check, or bank transfer. Cash back does not expire as long as the account is open, but once you close the card, you cannot earn new cash back. Redeem any remaining balance before you close the account.
Will a business card hurt my personal credit if I miss a payment?
Yes. Even though it is a business card, most issuers require you to personally may provide it, which means late payments or high balances can be reported to your personal credit report and lower your score. Pay on time to protect both your business and personal credit.
How much cash back can I realistically earn in a year?
That depends on how much you spend and which categories earn bonus rates. If you spend $50,000 per year and earn an average of 2% cash back across all purchases, you would earn $1,000. If you spend $100,000 and earn 2.5%, you would earn $2,500. Use the card issuer's cash back calculator to estimate your earnings based on your typical spending.