Expenses and overhead are the bane of any small business owner. But as the saying goes, you must spend money to make money.
However, in addition to earning a return on investment with your business expenses, why not earn free flights, cash back, hotel stays, and/or other rewards charging as much of your small business expenses when you apply for a small business credit card (and are approved) as possible?
Take a moment and add up your monthly expenses. Chances are your expenses add up into the thousands or tens of thousands every month.
For example, if your monthly expenses are $10,000, suppose you can charge $5,000 each month on when you apply for a small business credit card and are accepted, and you earn 2 air miles for every $1 spent, you could earn 10,000 air miles every month. Over the course of a year, you’ll have some serious air miles with which to travel.
Most expenses can be charged if you put a little effort into it.
Take a look at your expenses now and figure out which expenses can be charged. Consider the following:
Lease:
Ask your landlord if they accept lease payments via credit card. You never know and this could add up to some serious rewards such as cash back, air miles, hotel stays, or other rewards, depending on the small business credit card you go with.
Inventory:
If you carry inventory, talk to your suppliers about paying with your business card. This could result in a ton of rewards.
Supplies, equipment, and furniture:
Office supplies, equipment, and technology hardware adds up. Charge them and earn rewards.
Software:
You could easily pay for all software, new and upgrades, through your credit card.
Insurance:
Talk to you insurance broker about paying via credit card.
Regulatory small business fees:
Perhaps your governing bodies and/or municipalities that require payments for whatever reason will accept payment via credit card.
Transportation expenses:
Charge your business vehicle expenses – think lease, repairs, fuel, insurance, etc.
Get creative – charge your payroll:
I haven’t tried this, but in theory it seems to me you could actually pay your employees through your small business credit cards with … PayPal. Yeah, this could be stretching it a bit, but it could be possible. If you have a large payroll, it may be worth looking into. Do the following:
- Talk to your accountant about the legality of this in your jurisdiction first.
- Talk to your employees about whether they’d be open to the idea of receiving payment to a paypal account. They can easily attach a bank account to their PayPal account to transfer payment. You may need to offer an incentive for your employees to accept this payment concept.
- Talk to PayPal to explore if there would be any fees on your end and how to set this up through your credit card(s). Even if there are PayPal fees, the credit card rewards may be worth more than the cost.
- If it’s a go at this point, get a PayPal account for your business.
- Note: you’ll still need to issue statements and deduct the usual deductions – the only difference is rather than direct deposit or issuing a check, you transfer payment through your credit card to your employees’ PayPal accounts. Again, talk to your accountant.
If you hire people globally through the Internet using outsourcing services, this paypal payment system is very easy because PayPal is commonly used as the payment method (I accept many payments through PayPal).
2 more benefits of applying for a small business credit card and then charging the bulk of your business expenses
- You centralize your expenditures making it easier to monitor your monthly expenses. You deal with one statement tallied for you each month.
- You delay payment for approximately 30 days.
How to choose and apply for the right small business credit card
1. Determine what kind of rewards you’re most interested in. Are they hotel stays, air miles, cash back, VIP perks, etc.
2. Don’t necessarily reject the cards that require an annual fee. The rewards offered may be well worth the annual fee.
3. Examine the rewards carefully. Consider:
- How many air miles must you accumulate in order to actually fly somewhere?
- Are there restrictions with cashing in your rewards?
- Are there purchase restrictions to which the rewards apply?
- Is there a maximum amount you can charge each month? For example, do you stop receiving rewards after spending a certain amount?
- Compare interest rates carefully in the event you carry charges for a few months.
BE CAREFUL
Credit cards can be deadly if not properly managed. It’s easy to spend more than you can afford. This “charging your business expenses” idea is only worth doing if you can pay off your expenses each month. If you end up carrying a balance, it’s likely the interest charged will cost you more than the rewards you earn.
Click here to apply for small business credit cards.
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