Can you get a business credit card for your restaurant?
Yes, restaurant owners qualify for business credit cards. Restaurants are businesses. This applies to takeout joints as much as five-star sit-down affairs.
Any size of restaurant can qualify as a business. Have a small food truck you operate yourself? Even sole proprietors are eligible for business credit cards. You can get a business credit card as any of the follow business types:
- Sole proprietor
- Independent contractor
- Partnership
- LLC
- LLP
- S-corporation
- C-corporation
- B-corporation
- Nonprofit
You don't need to qualify for an EIN (Employer Identification Number), either. If you don't have employees, you can simply use your Social Security number (SSN) as your tax identification number when applying for a business credit card.
Small business credit cards vs. corporate credit cards
Another option some restaurant owners may want to consider is a corporate credit card. While the rewards won't necessarily be any better suited to restaurant expenses than a small business card, it might be better for your credit.
Most small business credit cards require a personal credit check when you apply. This is because of the personal guarantee. Essentially, you agree to share liability for your business credit card with your business. If your business is unable to repay the balance on your card, you'll be required to do it yourself.
All this means that if you default on a business credit card, it can hurt your personal credit. Corporate credit cards, on the other hand, have nothing to do with your personal credit.
Should restaurant owners get a business credit card?
Many restaurant owners are more reliant on vendor accounts than credit card accounts. For example, most restaurants get their food through specialist vendors that offer larger quantities and greater value than the corner supermarket.
However, some things aren't available on an account -- like that wholesale club run for foil sheets. Those types of expenses are often best put on a reliable business credit card. But that's not the only reason for picking up a business card. There are a number of pros to using business credit cards for your restaurant's expenses.
Pros of business credit cards for restaurants
The ability to earn rewards on eligible purchases is often enough of a reason to get a new credit card -- and it shouldn't be discounted here, either. But there are also other, more specific, reasons to get a business credit card for your restaurant, most of which have to do more with convenience than anything else. Here are a few pros to consider:
- Higher credit limits: Business cards tend to have much higher credit limits than consumer credit cards. Restaurant owners with high food and utility expenses may benefit from a card they won't max out by the end of the first week of each billing cycle.
- Accounting organization: A pillar of good business accounting is separating personal and business expenses. Pairing a business credit card with a business bank account can keep your finances organized and make tax time significantly less stressful.
- Build business credit: As an LLC or corporation, your restaurant can qualify for a business credit score. This can help you get vendor accounts and other forms of business financing. Your card issuer will report to the commercial credit bureaus, so business credit cards can help build business credit when you pay on time and keep your ongoing balances low.
- Employee cards: The business owner isn't always the one making the purchases. Many business credit cards offer free employee cards. You can set individual spending limits for each employee card and track expenses as they happen.
While there are many reasons in favor of getting a business credit card for your restaurant, there is one major con to consider. Read on for more.
Cons of business credit cards for restaurants
The main drawback to getting a small business credit card for your restaurant is that you'll be hard pressed to find one with useful bonus categories. Credit card companies offer plenty of options for spending at restaurants -- just not for them.
Unfortunately, most cards with bonus categories for things like wholesale stores and supermarkets are aimed at individual consumers. But even if you went with a personal credit card, the best grocery rewards cards have caps on how many eligible purchases you can earn bonus rewards on every year.
LEARN MORE: Best Grocery Credit Cards
As a result, the best path for a restaurant owner who wants a business credit card is likely a card with better-than-average flat-rate rewards. For example, a card with a flat 2% cash back rate on purchases will be just as rewarding when you buy new pans at the restaurant supply store as it is topping off your pens at the office supply store.
Choosing a credit card as a restaurant owner
The typical advice for choosing a business credit card is to look at the bonus rewards categories. In this case, however, the rewards are less of a factor since it's hard to earn bonus points on the niche expenses unique to restaurant owners.
LEARN MORE: How to Choose a Credit Card
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