Freelance work is becoming more and more common for Americans year over year – and younger workers are driving the trend. In 2024, a survey by Upwork, a marketplace for freelancers, revealed that more than half (53%) of Gen Z are working on freelance projects as their full-time job.
From Uber drivers and Instacart shoppers to freelance writers, photographers, or graphic designers, 1099 workers are essentially solo business owners. If you do this kind of work and start to make a significant income, you will be able to deduct business expenses when you do your tax return. That means you’ll need to start keeping meticulous records of your business-related spending – and business credit cards can help you do it.
That’s right, independent contractors can qualify for many business credit cards. In fact, just as with personal cards, business credit cards offer a number of perks, benefits and rewards that can help you maximize your freelance expenses. Learn more about how to identify the best credit cards for gig workers and freelancers along with tips on how to choose the best card for you.
How to qualify for a business credit card as a gig worker
Business credit cards are not available to everyone, but if you earn a fair amount of 1099 income, then you can be eligible since you’re technically a small business. When filling out applications, you will supply your personal contact and financial details (as you would with a regular credit card), but you will usually have to answer a few questions about your business as well. For example, the card issuer might ask for your business’ name, the amount of revenue you make, and how long you’ve been in business.
If you do a one-off freelance project and don’t plan to continue self-employment, then a business credit card is probably not worth getting. However, for someone with ongoing gig work who wants to keep personal and business expenses separate, then it can definitely make sense.
What are the key features I should look for in a credit card as a gig worker?
The best business cards for freelancers should have features that match your business needs. Depending on the type of work you do, this can vary. For example, DoorDash drivers could benefit from a business credit card that offers bonus rewards on gas like the card_name, whereas a digital marketing business would likely find the rewards the card_name offers on advertising purchases made with social media sites and search engines and internet, cable and phone services more useful.
Here are some features to look for when researching credit cards for gig work:
- Introductory 0% APR: If you need a little bit of help with start-up expenses or need to buy expensive new equipment, consider a business credit card that gives you a period of time with no interest on purchases. The card_name offers intro_apr_duration of 0% APR on new purchases, for example, before regular reg_apr,reg_apr_type applies.
- Welcome bonus: Business rewards cards oftentimes have sign-up bonuses that can be worth a couple to several hundred dollars, but there is usually a minimum spending requirement to earn it. If you know you have a big business expense coming up that you need to make, such as booking travel for an industry conference, the timing might be right for a business credit card with a generous welcome bonus. Of course, you don’t want to overspend and put yourself in a bad debt situation just to earn a bonus. Keep your business spending needs in mind when researching bonus requirements.
- Rewards: Finding a card that has bonus rewards aligned to your top business spending category can give you the most value. However, if your spending is not consistent, you could go for a flat-rate cash back card that rewards you a set amount (usually 1.5% to 2%) back on all of your purchases. One such example is card_name which earns 2X points on all purchases (applies to the first $50,000 in purchases per year, 1X point per dollar thereafter; terms and limitations may apply). No matter your rewards preference, the key to maximizing them is to try to pay your balance off in full each month. If you carry a balance and pay interest charges, it could end up costing you more than your rewards are worth. American Express is a CardRatings advertiser.
- Annual fee: Just as with personal credit cards, there are different tiers of business credit cards. No annual fee cards are probably best for most freelancers who are just starting out and might not do a ton of business spending. Cards with an annual fee usually have higher bonuses and a larger suite of benefits, but they also require a higher level of spending in order to squeeze enough value from the card to make the fee worthwhile.
How can I use a credit card to track my business expenses as a freelancer?
One of the key reasons to consider a business credit card if you’re a gig economy worker is to keep your business spending all in one place. This also allows you to separate your work-related purchases from your personal spending, and makes it easier to identify tax deductions. Many issuers let you look at your expenses by category, and you can get a snapshot of your account anytime online or via the card’s app.
In addition, some business credit cards offer tools to help streamline your bookkeeping and expense tracking even more. For instance, some cards let you export or sync your card transaction data directly into accounting software programs like QuickBooks or have reporting tools to help you identify trends and help with decision-making.
Another important feature you may need if your freelance work takes off is the ability to add employee cards to your account. If you need to hire some help or want to enlist a family member to help with a home business, business credit card issuers generally offer free employee cards. (Note that premium business cards may charge a fee for additional cards.) This allows you to manage employee expenses, set limits on their spending in some cases, and earn extra rewards if applicable.
Credit card tips for freelancers
If you decide to get a business credit card, there are a few strategies to keep in mind.
- Budget carefully. When you have variable income and income fluctuations, having a credit line can help you with cash flow. But unpredictable income can also put you at risk for getting into debt if you’re not mindful. Business credit cards may have high APRs, so if you’re revolving a balance, it could be costly.
- Maintain good records. Even though a business credit card can help with your bookkeeping, you should get into the practice of keeping receipts and invoices for tax purposes. In case you are ever audited, just pulling out your credit card statements may not offer enough context.
- Choose a card that fits your business size. Some business credit cards are ideal for freelancers and gig workers in that they don’t have an annual fee or require high levels of spending to earn certain perks. Others are targeted at mid-sized businesses that have a higher revenue or several employees.
- Keep your credit healthy. Business credit card activity can still impact your personal credit (and vice versa), so it’s important to develop and maintain good habits like paying bills on time and keeping balances as low as possible.
