5 smart reasons to pay your business taxes with a credit card in 2024

Unless you are a huge corporation that can punch every hole, your business will have to pay taxes. In fact, quarterly estimated tax requirements force you to pay taxes multiple times a year.

When it comes time to pay your taxes, consider how you will pay them. You can make ACH transfers from your bank account. However, you can also pay with a small business credit card. Here are a few reasons why I always choose that option:

1. Big tax bill = easy welcome bonus

To get the best welcome bonus, you’ll need to spend $3,000, $5,000, or even $10,000 on your new card within the first three (or sometimes six) months. For small businesses, this can be difficult with regular expenses, but it’s easy when it comes to paying taxes.

I’m not exactly a seven-figure CEO, but even the small business I run costs me thousands of dollars in taxes every quarter. So, I often time my new credit card application to coincide with my quarterly tax payments. This makes it easy to meet your spending needs without making unusual purchases.

2. Pay over time with an introductory 0% APR benefit

Ideally, you would regularly set aside a portion of your income to pay your estimated quarterly taxes. (I keep it in a high-yield savings account!) But if you’re a little behind, a credit card with an introductory 0% APR offer can give you some important breathing room.

These offers typically offer 0% APR for at least six months on new purchases. But the best intro APR cards offer 15 months or more. This allows you to maintain a balance without worrying about accruing interest charges, allowing you to pay your taxes over time.

Please pay the balance in full before the offer expires. At the end of the introductory period, interest will begin accruing on the remaining balance at the regular APR.

3. Separating things makes accounting easier.

If you’re a sole proprietor, you might not think too much about drawing a line between business and personal purchases. However, if you want to keep some kind of distance between the two for accounting purposes, using a business credit card is a must.

Accounting becomes much easier when all transactions are clearly stated for business purposes on your statements. Bonus points are awarded when you use your business checking account to pay by card.

4. You may receive a convenience fee as compensation.

one claim against Paying taxes with a credit card is a convenience fee. Depending on your processor, you may have to pay a fee of at least 1.82% to pay federal taxes using a credit card. (Some states charge more.)

But the great thing about rewards credit cards is that with the right card, you can ignore those fees altogether and still come out ahead. For example, with a great flat-rate 2% cash back rewards card, you can earn a net 0.18% cash back on purchases with a 1.82% fee.

This means you need to carefully consider which card you use. Many cards with bonus categories have lower flat rates on non-bonus purchases (1% to 1.5% is common), so you may not get the convenience fee back with these cards.

5. You can build business credit

Just as you have a personal credit history (actually three), your LLC or corporation can also build business credit. A positive credit history can help your business get business financing as well as better rates from business insurance and some providers.

Additionally, just like personal credit, opening a business credit card and using it responsibly can help you grow your business credit history. Here are a few things to keep in mind:

• Always pay the minimum amount on time. Nothing Will Ruin Your Credit Score – Business or Individual — Faster than arrears.
• Keep your card balance low. If you can’t pay the full amount, at least try to keep your utilization (how much of your credit limit you’re using) below 30%.

A new world of credit cards

I love that my small business has opened up a new world of credit card possibilities. Not only do my business cards make my accounting life easier, they also help me get a great return on all my business purchases, including taxes. As long as you pay attention to fees, they can be a good way to pay your estimated and annual business taxes.

NOTE: Our top-tier cashback cards now offer a 0% introductory APR through 2025.

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