How a credit card can turn self-employment expenses into perks


Every business—no matter how small or financially prudent—has its fair share of recurring expenses.

Whether it’s office supplies, travel expenses, software subscriptions, or all of the above, these costs can take a big bite out of a business’s profits, which, if you’re a self-employed freelancer, is your personal paycheque. While tax deductions and small business grants can help recoup some of these costs, by using the right credit card, you can earn rewards back on your business spending on a more consistent basis and, in effect, turn your business expenses into perks.

Look at your business spending patterns

The best credit cards in Canada offer anywhere from 1% to upwards of 5% in bonus rewards for every dollar spent, depending on the type of purchase. Picking the right credit card largely comes down to identifying which one offers the highest rewards on your business’s most frequent expenses.

Gas is arguably the most common credit card bonus category, which means you’ll have plenty of cards to choose from if your business requires you to regularly commute by car to meet with clients or vendors and you’re looking to save at the pump.

Bills is another popular bonus category, with some cards offering up to 3% in bonus rewards on any payments that are charged to your card on a recurring basis every month. That can include everything from your phone and internet plans to software subscriptions you may rely on like Adobe Creative Cloud.

Other common bonus categories include groceries, travel (hotel stays and airfare), restaurants, and in the case of some small business cards, office supplies.

Every credit card is unique, so you’ll want to compare your options to find which one has the combination of bonus categories that can deliver the highest return on your business spending. If you want to keep things simple and avoid having to think about bonus categories, a handful of “flat-rate cards” provide the same amount of rewards per dollar regardless of the type of purchase being made.

Travel or cash back

Aside from how many rewards you can get per dollar, you’ll want to consider which types of rewards you actually want to be earning in the first place: travel points or cash back.

Travel points are primarily geared towards flight tickets and hotel stays, with some of the best travel credit cards in Canada offering cardholders the freedom to redeem points for flights on any airline or even merchandise. If travelling between cities (or even countries) is a constant in your line of business, a travel card could be the right fit for you.

Cash back credit cards are considerably more straightforward than their points card counterparts and are best suited for those who don’t travel much or just want to rack up some dollar savings.

Welcome offers

Several credit cards come with sign-up promotions that either offer a large injection of travel points at once or let you earn cash back at an accelerated rate for your first few months. You’ll want to factor welcome offers into your credit card decision, especially if you have an upcoming business trip or need to make a number of big-ticket expenses like a new work laptop or office furniture.

Don’t forget about the side perks

On top of the ability to steadily earn points or cash back, credit cards also offer some lesser-known perks that translate into more instant savings for your company’s bottom line.

For example, most credit cards offer discounts of anywhere from 5% to 25% off rental car bookings as well as complementary rental car insurance. That can add up if you rely on rental vehicles to get around during business trips.

Most credit cards also offer extended warranty protection, which will double the warranty on your card purchases—including everything from your work laptop to the office coffee machine.

Depending on the card, you may automatically receive travel insurance benefits that’ll cover you, your business partners and coworkers in the instance you need to fly out-of-province. That alone is a huge savings as paying for travel insurance out of pocket can add up to several hundreds of dollars.

There are also a handful of more niche credit card perks like airport lounge access and even mobile device insurance, that latter of which will cover damages made to one of your business’s most important communications tools—your smartphone.

Aside from just looking at rewards, you’ll want to research the perks that each card offers to ensure they line up with your business priorities.

Important final notes

If you’re at least somewhat familiar with how credit card interest works, you’ll know that using a credit card is only an effective money-saving tool if you pay off your balance in full. Carrying a balance month-to-month will lead to interest charges and fees that can offset any rewards you may be earning.

You’ll also want to ensure you keep your business and personal credit card spending separate, otherwise you’ll make reporting your finances infinitely more complicated. Even if you’re using a regular consumer credit card for your freelance business, you should treat it as a full-fledged business card and not use it to buy things for yourself.

Ratehub is a website that compares mortgage rates, credit cards, high-interest savings accounts, chequing accounts and insurance with the goal to empower Canadians to search smarter and save money.

Want more advice on making the most of your credit cards? Check out some credit card tips for the self-employed!