Rack Up Credit Card Rewards for Your Business Expenses

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If you run a small business — or even just a side hustle with some recurring expenses, such as phone or Internet service — you can reap the benefits of a business rewards credit card.

We’ve all heard how much individuals can earn by taking advantage of credit card rewards, but did you know there are a ton of lucrative rewards available for businesses, too?

Applying for these cards might be tempting if you spend a lot on purchases for your business, hobby, or side hustle. The Ink Plus® Business Credit Card (offer is currently unavailable), for example, lets you earn 5 points per $1 on the first $50,000 spent at office supply stores and on cell phone, landline, Internet, and cable TV services. Meanwhile, The Business Platinum® Card from American Express offers a huge intro bonus and complimentary access to hundreds of airport lounges worldwide.

With any of the best business card offers, small businesses and those who run them can earn points and cash back in the same ways anyone else can, and often with huge benefits. But there are a lot of misconceptions when it comes to who can qualify for business credit and what type of business needs credit in the first place. So, how does it work?

How to Get Business Credit

You might think you need a huge business with employees to qualify for one of these offers, but that couldn’t be further from the truth. If you’re self-employed or earn any kind of side income, you could easily get business credit and start racking up rewards. Let’s start with the IRS definition of a business to see what business activity really entails:

“The term trade or business generally includes any activity carried on for the production of income from selling goods or performing services. It is not limited to integrated aggregates of assets, activities, and goodwill that comprise businesses for purposes of certain other provisions of the Internal Revenue Code. Activities of producing or distributing goods or performing services from which gross income is derived do not lose their identity as trades or businesses merely because they are carried on within a larger framework of other activities that may, or may not, be related to the organization’s exempt purposes.”

With the IRS definitely in mind, here’s what you need to qualify for business credit:

  • You need a side hustle: To qualify for a business credit card, you need to actively pursue side income of some kind. Your side business doesn’t necessarily need to be profitable yet, but its purpose should include making money. If you’re confused as to whether your hobby qualifies as a business, look to the IRS definition.
  • You need a tax ID number: To qualify for a business credit card, you may need a tax ID number or employer identification number (EIN) to list on your application. If you are applying as a sole proprietor, however, you can usually use your Social Security number instead.
  • You need monthly business expenses: In order to qualify for a business credit card, you need to agree to use your card for business expenses only. If your side hustle or business has operational charges or expenses you can put on a credit card each month, you’re in good shape.

Should I Establish Business Credit?

If you own a small business or have a money-making side hustle, it makes sense to establish some credit for business purposes. Not only can it help you keep your business and personal transactions separate, but it can also help you earn rewards for the purchases you were going to make anyway.

Chances are, many people already have a side hustle or business and don’t even know it. Even mowing grass in the summer can count if you treat the activity as a money-making pursuit. And if you own rental properties, drive for Uber or Lyft, sell crafts on Etsy, or are self-employed in any capacity, you are more than qualified to apply for a business credit card of your own.

Just remember, any charges you make with a business credit card will accrue interest every month you carry a balance. If you plan to use your new card regularly, make it a point to pay your balance in full every month.

Earning rewards will only help you in the long run if you remain debt-free and vow never to pay interest on your purchases. So pursue business credit with caution, and only if you have the self-restraint to charge only what you can afford to pay off.

Have you ever applied for business credit for your side hustle? What is your favorite business card?

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