small business credit card rewards can help you save money when you start a business or a side job. But if you want to reach your business goals, you need to come up with a smart plan to make the most of your efforts. And if you have a small business, you want to make sure you’re getting the most out of it.
As a business owner or someone with a side gig, the way you spend money may be perfect for earning credit card points, miles, or cash back. For instance, if your job requires you to fly often, you’re in a good position to earn miles for flights. Or, if you run a contracting business, you could get money back on the building materials and supplies you buy.
Your business is already costing you money. Why not work for some of it? Let’s look into how.
Why it’s a good idea for small business owners to use rewards cards
There are many good reasons to use a credit card for your business. For tax time, it’s important to keep your business expenses separate from your personal ones. This also makes it easier to keep track of your spending and manage your budget. Also, if you use your business credit card wisely, it will help you build your credit history.
You should look for a business credit card that lets you earn rewards. This is why.
- Make your bottom line better. By charging your regular business expenses to a rewards card, you can earn real money in the form of points, miles, and cash back. A flight paid for with points or cash back can save you hundreds of dollars that you can put back into your business.
- Card perks. Think about how a credit card could help your business in other ways besides giving you rewards. For example, if you travel for business often, a card that gives you access to airport lounges or gives you priority boarding can make a big difference. When you buy big items for your business, extras like purchase protection and longer warranties can give you peace of mind.
How to choose a business credit card with the best rewards
The first thing you should know about choosing a rewards credit card for your business is that they are not all the same. Your spending habits, needs, and business goals will determine which card is best for your business.
Here are some things to think about as you compare business credit cards:
- Type of rewards: First, think about what kinds of rewards would be best for your business. If you spend most of your money on travel, you might want miles or points instead of cash back. The key is to get a card with rewards that you are most likely to use.
- Introductory bonus: An introductory bonus can temporarily increase the value of a rewards card. For example, if you spend a certain amount in the first few months after opening the account, you might get 50,000 miles or $300 in cash back. But think about how much you’d have to spend to get the bonus. If you have to change the way you usually spend money to get a bonus, it might not be worth it.
- As was already said, rewards aren’t the only reason to get a card. Look for things like credits, service memberships, and shopping protections that will help your business.
- Interest and fees: If you don’t plan to pay off your balance in full every month, you should look at the APR for any business card you’re thinking about getting. Also, think about the card’s annual fee to see how easy it would be to get that money back in rewards. A lot of high-end cards with high annual fees also come with a lot of useful perks. Just make sure you will actually use them.
Can you use rewards from a business credit card for your own needs?
You might not always want to put the rewards from your credit card back into your business. You might want to save up travel miles so you can book your dream trip.
Since rewards from business credit cards are not taxed, using points or miles for personal use won’t cause any tax problems. But you should know that getting cash back can change how much of your business purchases you can deduct.
And if you run your business with a partner, you could face problems. In that case, you would need to come to an agreement about how points, miles, or cash back should be shared so that there aren’t any points, miles, or cash back disagreements.
How to handle the rewards that employees earn
Purchases made with employee cards are treated the same as purchases made with the main card, which means they also earn rewards. You can also make it easier to keep track of your expenses and keep records if you charge all of your purchases to the same account. And many issuers don’t charge extra if you want to add employees.
If you want to add employees to your business rewards account, think about whether you want to limit where the card can be used or how much it can be charged. Depending on the card, you may be able to set spending limits for each employee card right on the card. And if your card doesn’t have this feature, you might want to make a written policy for card use so that your employees know what they can and can’t do.
How to get the most out of the rewards on your business credit card
Plan ahead to get the most out of a business rewards credit card. Here are some specific things you can do to figure out your rewards strategy and get the most out of your rewards:
- Look at how much your business spends. Before you start comparing rewards cards, you should look closely at how much you usually spend on business each month. When you look at your bank statements, you can see where you spend the most money, which can help you choose the right rewards card.
- Think about the pros and cons of bonus categories. Some business rewards cards offer a flat rate of rewards, like 2% cash back on all purchases. Others have different levels of rewards, like 3% back on gas and 1.5% back on everything else. Choose a flat-rate rewards card if you want to keep things simple. If you want to spend in a way that gets you the most rewards, a card with bonus categories might be a better choice.
- Figure out what kinds of rewards and perks you want to get. If you choose a card with rewards that match your goals, you’ll get the most out of your money. Do you want to save money or put money back in your pocket? What kinds of perks do you like? If you have to travel a lot for your small business, it might be best to get a credit card for travel. On the other hand, if you don’t travel often, you might not be tempted to use the benefits that come with a travel card. If this is the case, you might be better off using a card that gives you cash back.
- Think about ways to get your money back. Getting the most out of rewards isn’t just about getting them. You should also think about how you’ll use them. Some ways to get money back are worth more than others. For example, when you trade in points or miles for travel, you usually get more value than when you trade in points or miles for gift cards. Also, use all of your card’s less-well-known benefits, such as free employee cards, accounting software, travel insurance, and consumer protections, to name a few. And lastly, don’t miss out on a welcome bonus that could give you extra points, miles, or cash back.
In conclusion
If you want to grow your business or side gig, getting one of the best business rewards credit cards could help you get there. Aside from giving you rewards, they can also make it easier for you to run the accounting side of your business. The most important thing is to take the time to find the right card for how your business spends money and how you plan to use the rewards you earn.
