small business credit card rewards can help you save money when starting a business or side hustle. To ensure maximum impact, you must develop a clever strategy in order to achieve your entrepreneurial goals. In the case of a small business, you also want to make sure your profits are being maximised.
Your spending patterns as a business owner or side hustler may be especially conducive to accumulating credit card points, miles, or cash back. You are primed to earn miles for flights, for instance, if your line of work requires frequent travel. Or, if you own a contracting business, you might be able to get paid in cash back for the supplies and building materials you purchase.
You have already started to invest in your business. Why not try to recoup some of it? Let’s examine the procedure.
Why entrepreneurs of small businesses should use rewards cards
For a variety of reasons, using a specific business credit card makes sense. For tax season, keeping your business and personal expenses separate is essential. It also makes it simpler to keep track of your spending and manage your budget. Additionally, responsible use of a business credit card will establish your credit history.
Although not all business credit cards do, you should search for one that does. This is why.
- Boost your revenue. Simply charging your regular business expenses to a rewards card will earn you points, miles, and cash back that are worth real money. A flight paid for with points or a cash-back redemption can net you hundreds of dollars that you can put back into your company.
- card benefits Think about the other ways a credit card could benefit your company besides rewards. If you frequently travel for work, for instance, a credit card that grants priority boarding or access to airport lounges could be a game-changer. If you’re making significant purchases to invest in your business, benefits like purchase protection and extended warranties can give you peace of mind.
How to choose a business credit card with the best rewards
The first thing to understand is that there is no one-size-fits-all rewards credit card for your company. Your spending patterns, needs, and objectives will determine which card is best for your company.
The following factors should be taken into account as you compare business credit card options:
- Type of reward: Consider the kind of reward that would be most beneficial to your company first. If you spend the majority of your money on travel, miles or points may be more advantageous than cash back. It’s important to pick a card with the rewards you’re most likely to use.
- Bonus at first use: A bonus at first use can raise the value of a rewards card, at least temporarily. For instance, if you make a certain amount of purchases within the first few months of opening the account, you might be eligible to earn 50,000 miles or $300 in cash back. However, consider the bonus’s size in relation to the amount of money required to earn it. It might not be worthwhile if you have to alter your typical spending habits to be eligible for a bonus.
- Benefits of cards: As was already mentioned, rewards aren’t the only allure. Look for benefits for your company, such as credits, service memberships, and purchase protections.
- Interest and fees: You should look into the APR for any business cards you are thinking about using if you don’t intend to pay the balance in full each month. Consider the annual fee of the card as well to see how quickly you could recoup it through rewards. Numerous premium credit cards with high annual fees offer numerous worthwhile benefits. Make sure you’ll actually use them, though.
Can you use your personal credit card rewards for business purposes?
It’s possible that you won’t always want to reinvest your credit card rewards in your company. Perhaps you want to earn some miles so you can reserve a dream vacation.
Redeeming points or miles for personal gain won’t cause any tax complications because business credit card rewards are not taxable. However, you should be aware that receiving cash back may limit the amount that you can write off for business expenses.
Additionally, if you’re operating your business with a partner, you might encounter difficulties. To avoid disputes over points, miles, or cash back in that situation, you would need to come to an agreement about how business rewards should be distributed.
How to manage rewards earned by employees
Purchases made with an employee card are treated in the same way as those made by the primary cardholder, so they too qualify for rewards. Having all purchases charged to the same account will also streamline expense tracking and record-keeping. Additionally, a lot of issuers don’t charge you extra to add employees.
If you’re thinking about adding employees to your business rewards account, decide if you want to place restrictions on the card’s usage or the amount that can be charged. You might have built-in features that let you assign spending limits to particular employee cards depending on the card. If your card doesn’t have this feature, think about writing a card usage policy so your staff members know what is and isn’t permitted.
How to make the most of your business credit card rewards
Having a plan is the first step in making the most of a business rewards credit card. To determine your rewards strategy and maximise your rewards earnings, follow these practical steps:
- Analyze your company’s expenditures. Take a close look at your typical monthly business spending before you begin comparing rewards cards. You can find out where you typically spend the most money by looking over your bank statements, which will help you choose the best rewards card.
- Evaluate the advantages of bonus categories. A flat reward rate, such as 2 percent cash back on all purchases, is offered by some business rewards cards. Others provide tiers of rewards, perhaps 3% for gas and 1% for everything else. A flat-rate rewards card is an option if you want to keep things simple. A card with bonus categories might make more sense if you want to strategically spend to earn the most rewards.
- Choose the rewards and benefits you want to receive. Selecting a credit card that offers rewards that support your objectives will help you get the best return on your money. Do you want to save money on travel or put more money in your pocket? What kinds of benefits are important to you? A travel credit card might be the best option if your small business involves a lot of travel. On the other hand, if you don’t travel frequently, you won’t be motivated to use the benefits that a travel card offers. In this situation, it might be wiser to put a cash back card first.
- Consider your options for redemption. Earning rewards is only one aspect of maximising benefits. You should also think about how you’ll employ them. Different redemption options have varying levels of value. For instance, redeeming points or miles for travel typically offers greater value than redeeming them for gift cards. Utilize all of the lesser-known benefits that your card may provide, including free employee cards, accounting software, travel insurance, and consumer protections, to name a few. Last but not least, don’t pass up the chance to receive a welcome bonus that could result in more points, miles, or cash back.
The conclusion
One of the best business rewards credit cards might be a step toward realising your dreams of expanding your company or side hustle. In addition to earning benefits, they can simplify the accounting side of your business’s management. Finding the right card that fits your company’s spending habits and how you intend to use your earned rewards is of utmost importance.
