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A credit card specifically designed for business expenses can quickly become a vital part of any business owner’s wallet. A credit card application is a fairly straightforward process, but business owners should be careful to report accurately when it comes to income and revenue. Typically a credit card issuer requires gross annual revenue from the previous year on a business card application. The applicant should report all revenue before taxes and expenses.
Why Is Business Revenue Required?
Credit card issuers use three things to assess whether the applicant will spend responsibly and be able to make monthly card payments on time:
- business revenue
- estimated monthly spending
- personal income
Issuers also use this information to set a credit limit. The greater the business revenue, the more likely the applicant business will be approved—and the larger the limit.
What Needs to Be Reported?
Most business credit card applications require gross annual revenue from the previous year. This includes any money brought in from sales or services, sales of stock or anything else that brings money into the business. Make sure to not subtract expenses or taxes from the annual revenue (there’s no need to share profits or net revenue).
Be careful not to report sales projections as revenue (unless the issuer specifically states this is acceptable). Usually only revenue that can be verified should be reported.
Small business owners may opt to, or be requested to, report both business revenue and personal income in order to guarantee to the issuer that they’re capable of making monthly payments on their business card. Keep in mind a business card applicant does not need to have a registered business in order to qualify. Sole proprietors (like freelancers or Uber drivers) can also qualify for a small business credit card. Simply report the previous year’s earnings (before taxes) as revenue.
What should be left out?
Be careful not to report revenue or income that can’t be verified with pay stubs, receipts, invoices or other documents. Credit card issuers may ask for hard proof that shows the applicant earned what they claimed.
Don’t report any personal income that’s not related to the business being reported in the application. For example, if the applicant has a full-time job at a fast food restaurant and the application is for a business credit card for their graphic design side hustle, fast food wages should not be included as business revenue. (The fast food wages can be reported as personal income, however.)
What If an Applicant Doesn’t Have Business Revenue Yet?
Not having any business revenue yet is not necessarily a deal-breaker on a business credit card application. Applicants can enter $0 as revenue as long as they are able to list personal income later in the application. Any income from a part or full-time job, a spouse’s income or profits from the business can all be reported as personal income on the application. The credit card issuer will use this information to determine whether the application will be approved and to set the size of the credit line.
Depending on the issuer, some applicants can enter sales projections from new businesses as revenue. The applicant should call the issuer to ask if this is acceptable. Do not do this without explicit permission from the issuer. Keep any projection documents handy in case the issuer asks for proof.
Above all, don’t lie on the application. This is illegal and could lead to heavy fines or imprisonment.
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Business owners and sole proprietors can qualify for business credit cards. Report gross annual revenue (before taxes and expenses) from the previous year on the application. Entering personal income can help boost the chances for approval, especially if a new business owner doesn’t have any revenue to report yet. Be careful not to lie on the application, which could lead to serious consequences.