How Credit Cards Can Earn Your Business Up to $10,000 a Year in Rewards

How Credit Cards Can Earn Your Business Up to $10,000 a Year in Rewards

We’ve published stories about how one business owner nearly always flies for free because of credit card spending and how another uses points earned on business spending to take exotic trips with his wife. These entrepreneurs have earned tens of thousands of dollars in free travel just by paying their expenses with a small business credit card.

In this post, we’ll lay out a path to show you how you can save thousands of dollars a year for your business by earning credit card rewards. The examples we’re going to outline below won’t apply to every business owner. If your small business has few or no employees or annual gross revenue of $500,000 or less (about half of all small businesses recently surveyed by the National Small Business Association fall in this category), you may find the math hard to match. But even if your business doesn’t have a big employee travel budget, you still may be able to earn a substantial number of points, miles or cash back from your business spending.

Since no two businesses look alike, it’s difficult to lay out scenarios that are applicable to everyone. That’s why we built a few spending assumptions into this model using average spending data where possible that you can manipulate based on your real-world spending:

The average small business spends 1% of its revenues on advertising. The typical business spends as much as $2,123 annually per employee on office supplies. A hotel room for business travel costs $180.12 per night and business trips last on average of three days. The cost of a car rental is $46.51 per day. Business trip meals costs on average $98.09 per day. Airfare is $450 per trip.

If your business includes frequent travel expenses, that can get pricey quick. One study suggests each business trip could cost your company $1,425 on average. Let’s look at how all this spending adds up for three different sizes of businesses — and what that might mean in terms of generating credit card rewards.

Scenario 1: No Employees, $1 Million in Annual Revenue

You’re a one-person shop, which means no employee expenses. You travel twice a month. Here’s a look at what your budget for common business expenses that could be paid with a credit card might look like:

Advertising and Marketing	Office Supplies	Travel
$10,000	$2,123	$34,180

Your travel budget includes $6,484 for hotels, $5,400 for airfare, $3,531 for food and $1,674 for rental cars.

Scenario 2: 15 Employees, $2.5 Million in Annual Revenue

Both your advertising and office supply expenses are significantly higher because you have employees and more revenue. Each employee travels six times a year.

Advertising and Marketing	Office Supplies	Travel
$25,000	$31,845	$128,174

Your travel budget includes $48,632 for hotels, $40,500 for airfare, $26,484 for food and $12,558 for rental cars.

Scenario 3: 30 Employees, $5 Million in Annual Revenue

Your advertising and office supply expenses increase again under this scenario, and so, too, do travel expenses. But your employees take fewer business trips per year, just five each on average and only half the employees need rental cars.

Advertising and Marketing	Office Supplies	Travel
$50,000	$63,690	$203,159

Hotels are the most expensive item in the travel budget, accounting for $81,054 in spending, while airfare is just $67,500. Meals cost $44,140 and car rentals come in at $10,465.

Maximizing Your Card Rewards

If you have the diversity of spending represented in the three scenarios above and your goal is to maximize credit card rewards, you’re going to need to own more than one business credit card. For this exercise, we chose credit cards that would earn top rewards in each of the following categories: Advertising, office supplies, hotels, car rentals, airfare and food.

Ink Business Preferred Credit Card

Best for: Ad spending

Rewards: Earn 3 points per dollar on the first $150,000 in combined purchases each account anniversary year spent in these categories: travel; shipping; internet, cable and phone and advertising on search engines and social media sites. All other purchases earn 1 point per dollar.

Rewards value: Chase’s Ultimate Rewards points are worth 2.1 cents apiece, according to TPG’s latest valuations, so you’ll earn 6.3 cents per point on the 3x categories before you hit the $150,000 annual limit.

Annual fee: $95

SimplyCash® Plus Business Credit Card from American Express

Best for: Office supplies

Rewards: Earn 5% cash back on the first $50,000 spent at wireless telephone services purchased directly from US service providers and US office supply stores, 3% back on one category of your choice from eight options (and 1% back on all other purchases): airfare purchased directly from airlines, hotel rooms purchased directly from hotels, car rentals purchased directly from select car rental companies, US gas stations, US restaurants, US purchases for advertising in select media, US purchases for shipping, US computer hardware and software and cloud computing purchases made directly from select providers.

Rewards value: This is a cash-back credit card, so you’re looking at a return of 1 to 5 cents per point.

Annual fee: None

Hilton Honors American Express Business Card Earn 12x at Hilton hotels with the Hilton Amex Business Card.(Photo courtesy of the Hilton Berlin)

Best for: Hotels (provided your business stays at Hilton properties)

Rewards: Earn 12x points at hotels and resorts in the Hilton portfolio, 6x points on select business and travel purchases and 3x points everywhere else.

Rewards value: Hilton points are worth 0.6 cents each, so you’ll get a return of up to 7.2%.

Annual fee: $95

The Blue BusinessSM Plus Credit Card from American Express

Best for: Car rentals and dining

Rewards: Earn 2x points on all purchases on the first $50,000 spent each calendar year.

Rewards value: American Express Membership Rewards points are worth 1.9 cents each, according to TPG valuations, so you’ll get 3.8 cents per point on the first $50,000 spent per year.

Annual fee: None

The Business Gold Rewards Card from American Express OPEN

Best for: Airfare

Rewards: Earn 3x points in one of the following five categories: airfare purchased directly from airlines, US purchases for advertising in select media, US gas stations (not including supermarkets or warehouse stores), US shipping and US computer hardware, software and cloud computing purchases made directly from select providers. Earn 2x points in each of the other four categories. Bonus points are limited to $100,000 in eligible purchases in each category each per year, and you earn 1 point per dollar thereafter.

Rewards value: 1.9 cents per point, so up to a 5.7% return (for the 3x categories).

Annual fee: $175, waived the first year

Playing Out the Scenarios

How much could you earn in credit card rewards based on the above spending scenarios using the suggested cards? Let’s find out.

In Scenario 1, you’d earn a combination of points and cash back worth $1,709. That’s good for a 3.7% overall return on your business spending. Here’s how the math works:

Earn 30,000 points worth $630 on ad spending $106.15 cash back on office supplies 77,820 points worth $466.92 on hotels 3,348 points worth $63.61 on rental cards 16,200 points worth $307.80 on airfare 7,062 points worth $134.18 on food

In Scenario 2, you’d earn a combination of points and cash back worth $10,461. That’s answers the question of how much you’d have to spend in business purchases in order to saving your firm $10,000 in credit card spending each year.

In Scenario 3, you’d earn a combination of points and cash back worth $18,093. This scenario gets a bit trickier because you may need to switch to a second card for your office supply spending after you hit the $50,000 annual limit for the bonus points on the SimplyCash Plus card. For the remaining spending, we chose the Ink Business Cash Credit Card, which pays 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year. You’ll also earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year, and you’ll get an unlimited 1% cash back on everything else.

Bottom Line

If you have tens of thousands of dollars of business expenses that you put on a credit card, you can save your company a good chunk of money — or at least reward yourself for all of that spending — if you have the right mix of credit cards to earn the most points or cash back as possible. With the scenarios outlined above, you could see a return of up to 5.7% (Scenario 3) on your business spending.

Featured image courtesy of Tomasz Zajda / EyeEm / Getty Images.