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Whether you’re having a good year or missing your sales targets, all entrepreneurs and small business owners want their bottom line to grow. An easy way to do this is to change the payment method you use for business expenses.
Choosing a credit card that deserves rewards is essential for startups and small businesses to scale. Choosing a card with cashback rewards can add to your bottom line as you invest in your business. It is literally a “spend money to make money” way.
Related: How entrepreneurs can scale and save money without start-up capital
How Cash Back Cards Can Help Your Business
As a consumer, you probably know the many cash back credit card options on the market today. Companies like Capital One, American Express, Chase, and others aggressively advertise on television, mailers, and other media.
You may see these ads and realize the value of a cash back credit card. You could even use one in your personal life. However, many entrepreneurs and small business owners do not associate the benefits of a cash back card with their business.
Business cash back credit cards pay you back a percentage of the money you spend on business. This includes expenses for office supplies, gas, and lodging for business-related travel, seller benefits, and more.
The amount of cashback varies depending on the card. Most companies offer a cash back rate of 1.5 to 5 percent. Such a refund might seem small, but the money you get adds up when you consider how much you spend on your business.
Related: How to Choose a Business Credit Card?
Paying back money from a cash back program offsets some of the money you spend on your business right away. This is money that goes straight to your bottom line with no additional work or expense.
For example, our agency uses the Capital One Spark Pro credit card, which offers two percent cashback. This can add up to $ 100,000 to our sales without increasing payroll or taking on more projects.
What to look for in a cash back credit card for your business
Business owners have a number of credit cards with cash back programs designed specifically for business owners. When considering a cash back credit card, here are some things to consider:
Cashback rate: How much money you get for your business expenses isn’t just a matter of more. While you want to maximize your cashback, it is also important to consider the other features of the card before applying.
Minimum purchase: Some programs require you to spend a minimum amount before you are eligible for cashback. For entrepreneurs and small business owners with high business expenses, this is usually not an issue. However, if the monthly minimum is higher than what you typically spend, it might be best to look for another card.
Spend categories: The rewards for purchases vary depending on the cash back program. Some cash back cards offer full reimbursement of all expenses related to your business, while others offer different amounts of cashback for different types of purchases. Be aware of the different levels of cashback when signing up for a credit card and read the terms and conditions carefully so you don’t get confused by your rewards.
Cap-on rewards: Most programs offer cashback on all eligible purchases with no spending limit. However, some cards only offer the maximum cashback for purchases up to a certain amount. As soon as you exceed this amount, your benefits will be reduced. If you are spending a lot on your business, you should make sure that there is no cap on your cashback.
Bonuses: The appeal of cash back credit cards isn’t limited to the extra cash you make shopping. The programs differ in their incentives, but you may be able to take advantage of bonus funds when your spending reaches a certain level, annual fees of $ 0 and more.
As with any credit card, it is important to budget for the annual fees, APR, and other costs. Cash back programs can help cover some of the card-related expenses, but you should be aware of the fees and interest rates that make up for the money added to your bottom line.
Related: What 6 money pros want to know about credit cards
Add it all up
Many entrepreneurs have maxed their credit cards and even got into debt to get a business off the ground. Given the cost of starting and running a small business, credit cards can appear both as an essential ally and, when the balance is high, an unforgiving adversary.
Cash back credit cards allow entrepreneurs and small business owners to invest in the business and get something back at the same time. The rewards may seem small in percentage terms, but the cash refunded for purchases can add up to large change.
Ultimately, businesses with many purchases can add hundreds of thousands of dollars to the bottom line without having to work harder or hire more people.