Many people think that business credit cards and business credit are the same thing. The truth is that they are not. A business credit card is usually issued for a business related expense. The money may be used for expenses such as rent, supplies, computer fees, utilities and advertising. The credit card company will charge interest on the money, which will be added to the business credit line. The interest rate varies depending on the company and the card.
An EIN only means that the individual does not have access to a credit line for the business. Therefore, the EIN cannot be used to make purchases. The IRS considers an EIN a tax id number and this number is used to track income. EIN numbers are also issued for self-employed individuals who do not claim any dependents on their taxes. If you have an EIN, you should contact the IRS to determine if it will affect your tax return.
Business credit cards are issued to businesses to allow them to make purchases. These cards can be used anywhere like gas stations, department stores and even online. The purchase can be made using your own credit or by using a pre-approved loan. You are not able to take advantage of cash back rewards, which are available with some cards. This is because the card company expects you to use your card for business related purchases.
As with personal credit, EINs are subject to collection agencies. Creditors can report your debt to these agencies if you fail to make payments on time. This can cause your credit score to drop. There are laws in place to protect against these types of actions by creditors. These laws are designed to limit the rights of the business credit card issuer.
For small business owners with EINs they may feel that they are paying for nothing since the EIN has no credit limit and will never increase. However, there are other benefits that come along with having a business credit card. This includes discounts on everyday goods such as groceries and even certain hotels.
Many EIN only companies also offer secured credit cards. With these cards you are able to deposit a certain amount of money into an account. By paying off your business credit card you are able to build up this credit. This allows you to get better rates on future loans and credit as well.