What Types of Business Expenses Should I Charge to a Business Credit Card?

 A business credit card is a valuable tool for managing finances, offering both convenience and flexibility when it comes to handling day-to-day operational expenses. By charging business expenses to your credit card, you not only streamline your accounting process but also potentially earn rewards or cashback. However, it's essential to charge only certain types of expenses to ensure you're maintaining proper financial management and staying within the guidelines set by tax laws and credit card policies.

In this article, we will explore the types of business expenses that are most appropriate to charge to a business credit card, as well as tips for using the card effectively to maintain financial control.

Why Use a Business Credit Card for Expenses?

Before diving into the specifics of what expenses to charge to a business credit card, it’s important to understand why using a business credit card can be advantageous:

1. Streamlined Accounting: Using a business credit card for purchases separates personal and business expenses, making it easier to track and manage your business’s financial activities.

2. Building Credit: Proper use of a business credit card can help establish or improve your business’s credit score, especially when you make timely payments and maintain a low credit utilization ratio.

3. Rewards: Many business credit cards offer rewards, such as cashback or points, for every dollar spent. By charging everyday expenses to your business credit card, you can earn rewards that can be reinvested into your business or used for future purchases.

4. Cash Flow Management: With a business credit card, you have access to a revolving line of credit, allowing you to cover business expenses when cash flow is low and pay off the balance when you have the funds available.

5. Expense Tracking: Many business credit cards provide detailed monthly statements that categorize your spending. This makes it easier to track your business’s financial health and stay organized for tax season.

Types of Business Expenses to Charge to a Business Credit Card

While you can technically use your business credit card for a wide variety of expenses, some expenses are more appropriate than others. Let’s break down the types of business expenses that you should consider charging to your business credit card.

1. Office Supplies

Office supplies are a common expense for most businesses, whether you're a startup or an established company. Items like pens, paper, printer ink, folders, and other necessary materials are essential for day-to-day operations. These costs can add up quickly, and charging them to your business credit card is a smart way to manage your budget while earning rewards for your purchases.

Charging office supplies to your business credit card allows you to keep track of these costs and makes it easier to manage your cash flow. Since office supplies are typically recurring expenses, using your business credit card for these purchases can help you accumulate rewards over time.

2. Marketing and Advertising

Marketing and advertising are essential for the growth and visibility of your business. Whether you're running online ads, creating print materials, or paying for other promotional activities, these are expenses that you can typically charge to your business credit card.

Examples of marketing and advertising expenses you can charge to a business credit card include:

• Digital advertising (Google Ads, Facebook Ads, etc.)

• Website hosting or domain fees

• Graphic design services

• Print materials (brochures, flyers, business cards)

• Marketing software and tools

By using a business credit card for these expenses, you can keep them separate from personal expenses, track your spending, and maximize rewards or cashback that can be reinvested into future marketing campaigns.

3. Travel and Transportation

For businesses that require travel, using a business credit card for expenses related to travel and transportation can simplify cash flow management. Travel expenses can include flights, hotel stays, rental cars, taxis, and gas for business-related trips.

Charging these costs to your business credit card is beneficial because:

• It provides a clear record of travel expenses.

• Many business credit cards offer travel-related benefits, such as discounts on flights, free travel insurance, and access to airport lounges.

• You can accumulate travel-related rewards or points that can be redeemed for future trips.

Using a business credit card for travel expenses can also help you manage cash flow, as you’ll have more time to pay for the charges compared to immediately depleting your cash reserves.

4. Business Meals and Entertainment

Business meals and entertainment expenses are often essential for networking, building relationships with clients, or attending conferences and events. While not all meals and entertainment are deductible, the IRS allows businesses to deduct a portion of business meal expenses when the meals are directly related to business activities.

You can charge these expenses to your business credit card for:

• Meals with clients, prospects, or business partners

• Catering for business meetings or events

• Tickets for events or shows related to business networking

• Subscriptions to industry-related magazines or journals

Be sure to keep detailed records and receipts for these transactions, as the IRS requires you to document the business purpose of these expenses to claim deductions.

5. Software and Subscriptions

In today’s digital age, most businesses rely on software to manage day-to-day operations. Whether it’s accounting software, project management tools, or email marketing platforms, charging software and subscription fees to your business credit card can help you track your spending while benefiting from rewards.

Examples of software and subscriptions you can charge include:

• Cloud storage (e.g., Google Drive, Dropbox)

• Accounting and invoicing software (e.g., QuickBooks, Xero)

• Marketing tools (e.g., Mailchimp, SEMrush)

• Project management software (e.g., Trello, Asana)

• Industry-specific software or tools

Using a business credit card for these services ensures that you can easily manage recurring charges and potentially earn rewards on subscriptions that are essential for your business’s operations.

6. Utilities and Rent

Utilities and rent are two significant ongoing expenses that can be charged to your business credit card. This could include payments for electricity, water, internet, phone services, and rent for office space.

Many landlords and service providers now accept credit card payments, making it easier to charge these expenses to your business credit card. By doing so, you gain more time to pay these bills (as credit card payments typically have a 30-day window) and can take advantage of rewards or cashback.

However, be cautious when charging large amounts like rent or utilities, as it’s essential to pay off the balance in full each month to avoid high interest charges.

7. Employee Benefits and Payroll

If your business offers employee benefits, such as health insurance, retirement contributions, or other perks, you may be able to charge some of these costs to your business credit card. Certain payroll services and benefit providers accept credit card payments, allowing you to manage these expenses more efficiently.

While you may not be able to charge all employee-related expenses to your credit card, it’s worth checking with your payroll provider to see if there are any options available.

8. Inventory and Supplies

For businesses involved in retail, manufacturing, or e-commerce, purchasing inventory and supplies is a significant expense. You can charge these purchases to your business credit card, which can help you manage cash flow when you need to restock products or materials.

Be mindful of your credit limit when charging inventory purchases, as this can be a significant cost. If you rely on inventory to generate sales, having the option to charge these costs to your business credit card allows you to make purchases and pay off the balance as cash flow comes in.

Expenses Not to Charge to Your Business Credit Card

While business credit cards are helpful for a wide range of business expenses, there are some expenses that should not be charged to the card:

• Personal Expenses: Always keep personal and business expenses separate. Charging personal expenses to your business credit card could lead to complications with bookkeeping and tax filings.

• Debt Repayments: You should not use your business credit card to pay off other debts or loans, as this could lead to unnecessary interest charges.

• Non-Business-Related Entertainment: Avoid charging personal entertainment expenses, like family vacations or non-business-related social events, to your business credit card.

Conclusion

A business credit card can be a valuable financial tool for managing a variety of business expenses, from office supplies and travel to marketing and software subscriptions. By charging the right types of expenses to your business credit card, you can streamline your cash flow management, earn rewards, and maintain a clear record of business-related expenditures. Just remember to use the credit card wisely, keep personal and business expenses separate, and avoid overextending your credit limit. By doing so, you’ll be able to make the most of your business credit card while keeping your business’s finances on track.