When starting a business or side hustle, credit cards that reward your business can become one of the financial tools to help you achieve your entrepreneur’s goals. However, it is important to develop smart strategies to maximize rewards.
Your spending habits may be uniquely suited to earning credit card points, miles, or cashback. If your business requires you to fly regularly, you are prepared to earn miles of flights. Alternatively, if you run a contracted business, you may earn cashback on the building materials and equipment you purchase.
You’re already spending money on your business. Would you like to get some of it back? Let’s see how.
Why Small Business Owners Use Reward Cards
Using a dedicated business credit card makes sense for many reasons. Separating business and personal expenses is key to the tax season, making it easier to track spending and manage your budget. Additionally, using your business credit card responsibly will help you build your business credit history.
Not all business credit cards earn rewards, but you need to look for one that does so. Here’s why:
- It can boost your revenue. Points, miles and cashback, which you can earn just by charging your regular business expenses to a reward card, are truly worth the money. Point-funded flights or cashback redemptions can be converted into hundreds of dollars that you can maintain or invest in your business.
- You can get perks for your business and for you. Rewards aside, consider how credit cards can help your business. For example, if you travel frequently, cards that offer airport lounge access or priority boarding can be a game changer. Benefits like purchase protection and extended warranty can be reassured if you are making large purchases to invest in your business.
How to choose a credit card with the best rewards for your business
The first thing you need to know about choosing a business reward card is that these cards aren’t perfect for all sizes. The best card for your business depends on your spending habits, business needs and entrepreneurial goals.
If you are ready to find a reward card that meets your criteria, start by following these steps.
- Check out our credit score. Without knowing your personal and business credit score, you don’t know what kind of credit cards are within reach of you. You can check your personal credit score. This can be considered if many credit card issuers do not yet have a business credit profile in multiple ways. Two common methods use free tools provided by specific publishers. This is taken from either Capital One or American Express’s MyCredit Guide, or from one of three credit bureaus. You can check your business credit score in multiple ways, such as requesting it through a business credit score agency like Dun & Bradstreet.
- Determine what type of type Reward I want you. Think about which type of rewards are most valuable to your business. In most cases, miles or points from top business travel credit cards may be more desirable than cashback. If you spend a lot of money on supplies and want to minimize those costs, cashback from popular business cashback credit cards may be better.
- Look at each card advantage. The reward is not the only draw. Look for benefits that will benefit your business, such as travel insurance, credit, service membership, and purchase protection.
- Compare each card interest Fees and fees. Check the annual business card rate (APR) you are considering in case you need to bring your card balance. Additionally, fees such as annual fees and foreign transaction fees will be used as factors to determine how easily you can earn them as a reward. Many premium cards come with higher annual fees, but many perks come with them, but you need to make sure you actually use them before applying.
- Choose a welcome card available bonus. Welcome bonuses can increase the value of your reward card, at least in the short term. For example, spending a certain amount within the first few months of opening an account may lead to thousands of miles or hundreds of dollars of cashback. But the weight of the bonus size for what you have to spend to win it. If you need to change your business’s regular spending or turn your business into debt just to qualify for a bonus, it’s not worth it.
Can I redeem my business credit card rewards for personal use?
You don’t always want to use your credit card rewards to reinvest in your business. Maybe you want to accumulate some travel miles to book your dream vacation.
Business card rewards are not taxable, so redemption of points or miles for personal gain is legal and does not cause a tax headache. However, earning cashback can affect how much you can deduct for your business purchase.
If you run a business with a partner, you may encounter challenges. You need to resolve agreements on how business rewards should be shared to avoid conflicts via points, miles or cashback.
How to manage employee rewards
The purchase of an employee’s card is treated the same as a purchase associated with a primary cardholder. That means you’re also getting rewards. These compensations are usually credited to your main credit card account, as opposed to an individual employee account, but this may differ. You can also simplify cost tracking and recordkeeping by charging all your purchases to the same account. Many publishers can add employees at no additional charge.
If you are considering adding employees to your business card compensation account, consider whether you can set limits where your cards can be used or whether you can charge them. Most business cards have built-in features that allow you to assign spending limits to individual employee cards.
If your card does not have this feature, we recommend that you create a written policy to use your card, as employees understand what is not permitted. It is also important to make it clear that credit card compensation belongs to the company, not the individual employees, to avoid cases in which employees may seek to redeem them.
How to make the most of your business credit card rewards
Making the most out of your business reward credit card starts with planning. Below are specific steps you can take to determine your compensation strategy and maximize your compensation revenue.
- Analyze business spending. Take a closer look at typical business spending for a particular month. Reviewing your bank statements can help you decide where to spend your most money. This allows you to target the appropriate rewards with new cards. It is also a good idea to keep your spending patterns in mind when you are aiming for a credit card welcome bonus.
- Compare and explore the benefits of bonus categories. Some business reward cards offer flat reward rates, including 2% cashback on all purchases. Others offer incremental rewards or rewards in the spinning category, such as 3% of office supplies and 1.5% for all others. To make the most of your reward rate, you need to make sure you charge your card for the right purchase.
- Think about redemption options. Maximizing your rewards doesn’t just mean getting them. You should consider how to use them. Some redemption options offer more value than others. For example, when you migrate points or miles for a trip, you can earn more value than a gift card. You may also be able to transfer your rewards to your partner to further maximize what you earn.
- Take advantage of statement credits. Business credit cards may come with additional statement credits from various businesses affiliated with the card issuer. For example, you may be able to get monthly statement credits for phone and internet service bundles, or annual credits for supply from your office supply store. These credits will help you make the most of your card’s benefits.
Make the most of your card’s lesser known business card perks, including free employee cards, accounting software, travel insurance, and consumer protection. And finally, don’t miss out on the possibility of a welcome bonus that could earn extra points, miles or cashback.
Conclusion
If you’re interested in growing your business or side hustle, a small business credit card offering rewards can be a stepping stone to achieving your goals. Aside from earning rewards, they can make managing your business easier. Most importantly, it takes time to find the right card that matches how your business spent and how you use the rewards you earn.
