Starting a Business Can You Legally Own a Business Credit Card Without Owning a Legal Business?

[Lion Heart 550]

Jurisdiction

California

Dear Forum,

I would like to know if one can legally own a business credit card without owning a legal business. In this case the individual owns two rental properties in his name and has told the bank that he has a business to which he was given a business credit card. Can there be adverse consequences to these actions because his investment properties are not held under a business entity?

Sincerely,

Lion Heart 550

 

[army judge]

Dear Forum,

I would like to know if one can legally own a business credit card without owning a legal business. In this case the individual owns two rental properties in his name and has told the bank that he has a business to which he was given a business credit card. Can there be adverse consequences to these actions because his investment properties are not held under a business entity?

Sincerely,

Lion Heart 550

My, my, my.
If he or she has been issued a business credit card, I suspect he or she can be issued a business credit card.
Some people own thousands of rental units.
Some people own one rental unit.
Some businesses make billions of dollars monthly.
Some businesses generate less than a thousand dollars annually.
Nonetheless, big and small, they're businesses all.

 

[adjusterjack]

I would like to know if one can legally own a business credit card without owning a legal business.

Well, it should be obvious that telling the bank you have a business when you don't could be construed as fraud. Whether or not anything bad happens as a result depends on whether you default or not.

In this case the individual owns two rental properties in his name and has told the bank that he has a business to which he was given a business credit card.

Owning rental properties certainly qualifies as a business. My own bank's online application for a business credit card lists Real Estate as a category and does not ask for further details.

Can there be adverse consequences to these actions because his investment properties are not held under a business entity?

Astronomically unlikely.

My take: Getting a business credit card for rental properties - perfectly legit.

 

[Lion Heart 550]

Dear Forum,

So anyone can legally say they have a business even if the business does not have a business license, permit or legal entity.

Sincerely,

Lion Heart 550

 

[army judge]

Dear Forum,

So anyone can legally say they have a business even if the business does not have a business license, permit or legal entity.

Sincerely,

Lion Heart 550

That's not what anyone said.
I doubt that anyone would say that.
However, even if someone did, it's not the same as a judge saying it.

 

[d1amund]

Dear Forum,

So anyone can legally say they have a business even if the business does not have a business license, permit or legal entity.

Sincerely,

Lion Heart 550

Why are you concerned with this in the first place?

 

[Lion Heart 550]

Why are you concerned with this in the first place?

Dear d1amund,

I am concerned because a family member has done what I have described. I thought that in order to get a business credit card you would have to have a legal business. When I say legal business I mean a business that has a legal entity.

Sincerely,

Lion Heart 550

 

[adjusterjack]

I am concerned because a family member has done what I have described. I thought that in order to get a business credit card you would have to have a legal business. When I say legal business I mean a business that has a legal entity.

Perhaps you don't understand what a "legal business entity" is.

It can be an income producing endeavor conducted by an individual in his own name as a sole proprietorship.

That's exactly what a person who owns rentals is doing.

If you need more proof of that take a look at IRS Schedule E:

https://www.irs.gov/pub/irs-pdf/f1040se.pdf

Now compare it to Schedule C:

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Note the similarities in how income and deductible expenses are addressed.

So, yes, a person owning rentals in his own name is certainly qualified to have a business credit card.

Now, getting back to

So anyone can legally say they have a business even if the business does not have a business license, permit or legal entity.

As written, that statement is true as there is no civil or criminal statute that prohibits a person from "saying" that.

What you have to understand is that, when you discuss LAW, you have to be aware of the specificity of language that is required for any conclusions to be valid.

And, generally, any question or statement that includes the word "can" almost invariably has to be answered with the word "yes" because the word "can" denotes an ability to do something, not whether it's done rightly or wrongly.

 

[Michael Wechsler]

I highly doubt that a reputable bank would simply hand over a business credit card to an individual that isn't secured by something substantial and with proper paperwork. A sole proprietorship is a legal business and a DBA (Doing Business As) form may also have been filed, e.g. doing business as Anne's Rentals. Here is the State of California procedure for Registering a Fictitious Business Name.

A fictitious business name statement (D.b.a. or "doing business as") must be registered with the county clerk of the county of the registrant's principal place of business if the business is any of the following:

• Sole proprietorship doing business under a name not containing the owner's surname, such as Smith Accounting Services;
• Partnership; or,
• Corporation doing business under a name other than its legal name

 

[Lion Heart 550]

Perhaps you don't understand what a "legal business entity" is.

It can be an income producing endeavor conducted by an individual in his own name as a sole proprietorship.

That's exactly what a person who owns rentals is doing.

If you need more proof of that take a look at IRS Schedule E:

https://www.irs.gov/pub/irs-pdf/f1040se.pdf

Now compare it to Schedule C:

https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Note the similarities in how income and deductible expenses are addressed.

So, yes, a person owning rentals in his own name is certainly qualified to have a business credit card.

Now, getting back to



As written, that statement is true as there is no civil or criminal statute that prohibits a person from "saying" that.

What you have to understand is that, when you discuss LAW, you have to be aware of the specificity of language that is required for any conclusions to be valid.

And, generally, any question or statement that includes the word "can" almost invariably has to be answered with the word "yes" because the word "can" denotes an ability to do something, not whether it's done rightly or wrongly.

Dear adjusterjack,

Thank you for your explanation. I think I understand now. My relative who is my father is operating by default as a sole proprietorship. I did not know that you do not need to form a legal entity to have a business. The issue still remains that my dad still should be obtaining all proper licensing and permits to run his business which I will mention to him very soon. I plan to help him by calling the city and asking them about these requirements.

Sincerely,

Lion Heart 550

 

[adjusterjack]

The issue still remains that my dad still should be obtaining all proper licensing and permits to run his business which I will mention to him very soon.

I do not believe that the state of California requires a "business" license or permit to own a couple of rentals. But some counties and cities require registration of rentals.

You appear to be a little obsessive about this so, before you get on your Dad's case about it, I suggest you get your ducks in a row and contact the Secretary of State to see if there are any requirements that you can print out and hand to him as well as contacting the county and city where the properties are located and do the same.

You might also refer him to the CA landlord tenant guide and statutes:

http://www.dca.ca.gov/publications/landlordbook/catenant.pdf

CA Codes (civ:1940-1954.1)