How Business Owners Can Get More Value From Their Cash flow With Credit Card Rewards

business man using credit card to buy online items in coffee shop

A rewards credit card can be a significant money-saving tool when embarking on a business venture or side hustle. However, developing a strategy to maximise your rewards is essential.

The key is to find a card that aligns with your business’s spending habits and how you plan to use the rewards.

Why Small-Business Owners Should Use Rewards Cards

Using a dedicated business credit card offers multiple advantages. Not only does it simplify separating business and personal expenses, which is crucial for tax season, but it also helps track spending and manage budgets. Moreover, responsible use of a business credit card can build your business’s credit history.

It doesn’t matter whether you are a small business owner, sole trader or enterprise company.

The key takeaway of credit card rewards:

  • Business credit cards offering rewards can help small-business owners enhance their financial health and access valuable benefits.
  • Choose rewards based on your business’s primary expenses.
  • Consider the card’s interest rates, fees, and additional perks.
  • Business credit card rewards can be used personally without tax implications.

Benefits of Rewards Cards

Not every business credit card offers rewards, but opting for one that does can be highly beneficial:

  1. Boost your bottom line: The points, miles, or cash back earned from regular business expenses translate to real money. For example, points-funded flights or cash back can save you hundreds of dollars, which can be reinvested in your business.
  2. Perks for your business and you:Beyond rewards, consider other benefits a card may offer. For frequent business travellers, perks like airport lounge access or priority boarding can be invaluable. Purchase protection and extended warranties provide peace of mind for large business purchases.

Read Aureus Financial’s comprehensive analysis of the worth of credit card rewards for more information if you’re still unsure.

Choosing the Best Credit Card for Your Business

Selecting the right business rewards card depends on your spending habits, business needs, and goals. Here are some factors to consider:

  • Rewards type: Determine which type of rewards are most valuable for your business. For frequent travellers, miles or points might be more beneficial than cash back.
  • Introductory bonus: Many cards offer a welcome bonus, such as 50,000 miles or $500 cash back for spending a certain amount within the first few months. Assess whether the bonus is worth the required spending.
  • Card benefits: Look for additional perks like travel credits, service memberships, and purchase protections.
  • Interest and fees: If you don’t pay your balance in full each month, consider the card’s APR. Also, factor in the annual fee and whether you can easily earn it back through rewards.

For more detailed comparisons and the best credit card options, visit Australia’s dedicated credit card comparison site, Credit Card Compare.

Personal Use of Business Credit Card Rewards

Business credit card rewards are not taxable, allowing you to use them for personal benefit without tax complications. This means you can accumulate travel miles for a personal vacation or enjoy cash back for non-business expenses.

However, if you have business partners, it’s essential to agree on how rewards will be shared to avoid conflicts.

Managing Employee Rewards

Employee card purchases are treated the same as the primary cardholder’s, meaning they also earn rewards. This can simplify expense tracking and record-keeping. Many issuers offer free employee cards and allow you to set spending limits. If your card lacks this feature, establish a written policy to guide employees on card use.

Maximising Your Business Credit Card Rewards

Here are steps to develop a rewards strategy and maximise earnings:

  1. Analyse your spending: Review your business’s monthly expenses to understand where you spend the most. This helps target the right rewards card and can also streamline your cash flow and revenue.
  2. Determine desired rewards and perks: Choose a card that aligns with your goals, whether it’s putting money back into your business or saving on travel.
  3. Consider bonus categories: Some cards offer flat-rate rewards, while others provide tiered rewards or rewards in rotating categories. Choose based on your preference for simplicity or strategic spending.
  4. Evaluate redemption options: Some redemption options offer more value. Typically, points or miles provide better returns on travel than gift cards.

Take advantage of lesser-known perks like free employee cards, accounting software, travel insurance, and consumer protections. Look out for welcome bonuses offering additional points, miles, or cash back.

The Bottom Line

A small-business credit card that offers rewards can be instrumental in growing your business or side hustle. In addition to earning rewards, these cards can simplify managing your business finances. The key is to find a card that aligns with your business’s spending habits and how you plan to use the rewards.

For more on credit cards, check out the ASIC MoneySmart website.