Are credit card payments considered a business expense?

Quick insights

• Business expenses are any costs a business incurs that are considered ordinary and necessary to running the business.
• Annual credit card fees may be considered a business expense.
• Consult with a tax professional to determine which expenses are considered business expenses.

Many businesses use credit cards to access capital and earn rewards and points on necessary expenses. Business expenses that go on a credit card can range from a $5 coffee bought at a networking meeting to thousands of dollars spent on technology upgrades for your team.

How you use a card and what qualifies as a business expense is specific to the business, but in this article, we'll explore a few common expenses and how you may be able to deduct some fees associated with business credit cards.

What is considered a business expense

Business expenses are typically defined as any costs associated with running a company and making sales. Purchases you make that are ordinary and necessary to running a business may be considered a business expense, according to Internal Revenue Service regulations. What qualifies as a business expense can often depend in part on the company structure (LLC, S-Corp, self-employed, etc.), who it serves and how it conducts business.

There are several expenses businesses may incur as a normal part of running their business. Common business expenses may include:

• Dues and subscriptions
• Insurance
• Maintenance and repairs
• Office expenses and supplies
• Office space
• Marketing and advertising
• Telephone and internet
• Utilities
• Legal and professional expenses

You may be able to put some of these expenses on a credit card.

Credit card fees and your business

Credit card fees may be considered a business expense if they can be viewed as both an ordinary and necessary part of the cost of doing business. Some businesses may use credit cards and process credit card transactions as a normal part of conducting business.

You may want to consult with a tax professional to determine what expenses qualify as business expenses. The categorization of expenses can have tax implications, especially as it relates to the deductibility of business expenses.  For a guide to business expense resources, see this IRS publication.

In summary

There are many benefits to using a business credit card. You may choose to put expenses on your card that are considered ordinary and necessary to running your business to help you earn rewards and points. Credit card fees may be considered a business expense if they are an ordinary and necessary part of running your business. You may want to work with your tax professional to determine which expenses, including fees, may be considered business expenses.