Small business credit card or corporate credit card: Which is right for you?

The best credit cards for businesses give small business owners the tools they need to build and finance their companies, whether that company consists of a single individual or a growing team of employees. Here’s what you need to know about small business cards vs. corporate business cards, and how to decide which credit card is best for your business.

Small business cards can be used by both individuals and corporations 

There’s a lot of confusion around small business credit cards. Freelancers, for example, might assume that they aren’t eligible for a small business card because they’re not “a business.” Likewise, small business owners who have incorporated their businesses might assume that they should apply for a corporate credit card instead of a small business card — after all, they’re a corporation, right?

Let’s get some of these assumptions out of the way.

  • First: sole proprietors, including freelancers and solopreneurs, are absolutely eligible to take out small business credit cards. In fact, having a small business card in your wallet can be an excellent tool, whether you’re hoping to keep business expenses separate from personal expenses, cover business costs during periods of low cash flow or earn rewards on everything from airfare to internet.
  • Second: just because your business is registered as an LLC, C Corp or S Corp doesn’t mean that a corporate business card is right for you. In many cases, a small business credit card is going to be the better fit (yes, even if you have employees). A lot of successful small businesses never grow large enough to be eligible for corporate credit cards – which often require annual revenue in the millions – and that’s fine. You can get everything you need and more with the best small business credit cards.

Corporate credit cards are for corporations with significant revenue

To be eligible for a corporate credit card, your small business should not only be registered as a corporation but also generate a significant amount of revenue. Different corporate credit cards will have different income requirements. The Capital One One Card, for example, is for corporations with revenue of at least $10 million per year. The Brex Corporate Card for Startups requires you to have at least $100,000 in your corporate bank account. American Express wants you to have $4 million in annual revenue before applying for one of its corporate business cards.

If your business isn’t bringing in quite that much money, don’t worry. Businesses that aren’t eligible for the Capital One One Card, for example, might want to apply for one of Capital One’s Spark Business® credit cards — such as the Spark® Cash from Capital One®, which offers unlimited 2% cash back on all purchases. American Express also offers several excellent business credit cards, including The Business Platinum Card®, one of the best business travel cards on the market.

Both business credit cards and corporate credit cards offer options for employees

If you want your employees to be able to make purchases on behalf of your business, you’ll probably want to outfit them with credit cards of their own. The top business credit cards let you take out employee credit cards at no additional cost, making it easy for you to delegate purchasing responsibility to your team.

Corporate credit cards also let you issue cards to employees, though these cards often come at a cost; the Capital One One Card charges $35 per cardholder, and the Brex Corporate Card for Startups charges $5 per employee card per month. 

However, there’s a big difference between issuing business credit cards to employees and issuing corporate credit cards to employees, and it has to do with liability. If an employee runs up a bill on a business credit card, the business owner is liable for paying it off. In an ideal world, you’ll be able to cover the bill from your business’s bank account — but if you can’t, you’ll have to cover it out of pocket. (Some small business owners choose to set spending limits on their employee credit cards to protect themselves from unexpected expenses.) 

With corporate credit cards, liability either falls with the corporation or with the individual employee; in some cases, the corporation and the employee are jointly liable.

Corporate credit cards come with corporate-level service 

The other big difference between business credit cards and corporate credit cards has to do with the level of service provided. While small business credit cards include a number of business-friendly perks, from the ability to export transactions to popular accounting software programs (like Quickbooks) to credits for TSA PreCheck and Global Entry applications, corporate credit cards come with a customized solutions team ready to help your company manage its finances.

This service differential makes sense, of course; corporate clients with annual revenue in the millions of dollars have different needs and requirements than small business owners with annual revenues of five or six figures. If your business is eligible for a corporate credit card, expect—and take advantage of—the corporate support your card issuer provides. 

At this point, you probably have a good idea of whether your business is better suited for a small business card or a corporate credit card. If you’re not at the corporate credit card level yet, that’s okay. You can still take advantage of the many excellent small business credit cards out there, and use those cards to help your business grow.