Choosing the Right Income Style for Your Business

Most business owners eventually reach the same point: They realize that cash back isn’t enough and instead want to start earning points or miles.

But once you make that change, a new question quickly arises: what is the right approach to making money?

There is no one-size-fits-all answer. But most strategies fall into two camps: simple, consistent winnings, or more complex optimization of bonus categories.

Simple and consistent

If you’re too busy to spend much time or plan to earn travel rewards, a card with a simple earning structure may be a good option. the new Capital One Venture Business and his older brother, Capital One Venture X BusinessThey are good examples of this. Every time you make purchases with these cards you will earn 2 miles for every dollar spent.

The only exception is booking trips through Capital One Business Travelwhere you will earn at higher (even better) rates.

The advantage of this structure is the “set it and forget it” mentality that allows you to focus on running your business. You’ll never have to worry about what categories your expenses fall into or whether an employee used the least optimal card with a merchant. And, if you don’t mind booking through Capital One Business Travel, it’s an easy and lucrative way to earn extra Venture miles.

The downside is the lack of other bonus categories where you can actually rack up points. And, specifically with Capital One’s network of transfer partners, the lack of a major U.S. airline partner can be limiting.

Yes, you can use points with foreign airlines to book domestic flights on US airlines (and there are actually some good options for this, like Finnair Plus and Air Canada airplane). But that can ultimately make the simple strategy seem more complicated than it should.

A little more complicated

On the other hand, there are several credit cards that feature a variety of bonus categories tailored to small business owners. The obvious benefit here is to increase the rate at which points or miles are earned. But a strategy of this nature requires a little more attention.

You’ll need to make sure you spend more in those business categories than in a category that only earns 1 point or mile per dollar, so that your effective earning rate exceeds the 2 miles per dollar you can earn in the example above. Chase has a number of cards to fit the requirements of small business owners, including the Ink Business Cards and the relatively new Reserve Chase Sapphire for Business℠ (see rates and fees).

Let’s use Sapphire Reserve for Business as an example here. While this card’s $795 annual fee is higher than the Venture X Business, it also has a variety of bonus categories that allow you to rack up points, such as:

• 8 points per dollar spent when booking travel through the Chase Travel℠ Portal.
• 5 points per dollar on Lyft rides (through September 30, 2027).
• 4 points per dollar when you book flights or hotels directly with an airline or hotel chain.
• 3 points per dollar on social media and search engine advertising.
• 1 point per dollar on all other purchases

Comparing both strategies

Let’s take a theoretical business expense of $10,000 and compare these two profit strategies.

Spend $10,000 with virtually any merchant other than Capital One Business Travel and you’ll earn 20,000 Capital One miles.

Spend that same $10,000 on your Sapphire Reserve for Business card, it might look like this:

• $2,500 in social media spending: 7,500 points
• $2,500 in direct airline or hotel bookings: 10,000 points
• $5,000 in spending on everything else: 5,000 points

This scenario gives us more points (22,500), but if your spending habits don’t align well with the bonus categories, you could earn less than you would with double points on everything.

Conclusion

There’s nothing wrong with being simple and direct, especially when it comes to earning miles and points. But there are so many bonus categories on various small business credit cards (think utilities, cell phone bills, digital and software subscriptions, and a host of other categories that businesses invest heavily in) that it may be worth seeing if a more complicated card can help you optimize your spending.

Or consider a combination of the two, where you use one card to focus on your biggest recurring business expenses and let a simple double miles on everything card cover everything else.