What’s the best way to set up credit cards for a multi-owner business?

 

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What’s the best way to set up credit cards for a multi-owner business?

From what I’ve found so far, it looks like business credit cards for small businesses (i.e. not corporate cards) are tied to both the company’s credit and an individual’s credit score, and the individual is usually responsible for payments if the company can’t make payment.

To me, it would make the most sense to apply for a business credit card with all of the owners being co-signers so the personal liability is fairly distributed. But from what I’ve found, the concept of cosigning usually only exists for situations like a teenager with no established credit having a parent as a cosigner.

Any tips on how to approach this? It just seems unfair to me that one owner should take on the liability for themselves plus the rest of the company.

What’s the best way to set up credit cards for a multi-owner business?

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8 Replies to “What’s the best way to set up credit cards for a multi-owner business?”

  1. If Chase is near you, I was just told they launched a new credit card where the liability isn’t on anyone. My company uses Brex – they’re great but you do have to pay the full balance monthly.

  2. My business took out a CC and my partner signed as the responsible party. We separately signed an agreement referencing the account that indicates in event of default, each partner is responsible for an amount equal to their equity percentage.

  3. Or you could have each person get their own business card with their own personal credit and the business would pay each person’s credit card bill as long as they spent in on stuff that you all agreed in advance (and in writing) was business related.

    In my experience business credit cards (and bank loans for that matter) are always tied to personal credit until you’re talking millions of dollars in credit.

  4. > all of the owners being co-signers so the personal liability is fairly distributed

    You may want to double check that, as I believe it leaves each owner 100% liable, not spread it amongst the owners.

  5. Following. I’m in the same boat. Just started a small business as a partner. The bank we opened our business checking with said they’re credit card company t usually denies new businesses because there is no credit history so they told us to look elsewhere for business credit cards

  6. If one forms an LLC and obtains an EIN won’t a bank float a small amount of credit, just like a personal card? Then ones business limit goes up as a history of ontime payments are made, right?

  7. As long as you use your biz CC for biz expense, there’s no difference whose name on it. The bill is paid by the Company.

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