These days, many of us wear different hats to earn income on the side. You might clock out of one job and into the next as a ride-hailing driver, Airbnb host, Etsy shop owner or pet sitter.
Such "gig economy" work can make for a stressful tax season that eats up your time (and billable hours) and costs you potential deductions. A separate credit card for business purposes can help simplify things and maximize your income.
Here's how a regular rewards credit card or a rewards-earning business credit card can offer value to your side hustle.
1. SIMPLIFY THE PAPER TRAIL
Using a separate credit card for your side business can save hours over sorting personal from business expenses, and prevent you from missing valuable deductions. Everything you need to track is on one spending report. You'll still need receipts, but your expenses can easily be found and backed up.
Harry Campbell, founder of The Rideshare Guy site and author of "The Rideshare Guide," got a business credit card when he left his day job and formed a limited liability company. Previously, as an aerospace engineer with a side gig, he tracked business expenses with receipts and forwarded emails.
"I think it was definitely more work," he says. "Most of the time, it's kind of easy to forget to do some of that stuff." Campbell now blogs full time and is a ride-hailing driver on the side.
Whether you get a business credit card or a regular credit card for business purposes depends on your goals and expenses.
"If you actually want to do what you're doing for the next two to three years, and you want to grow, then at some point you're going to need business credit ," says Miguel Alexander Centeno, partner at Shared Economy Tax.
Some business credit cards take your personal credit score into consideration, so you'll likely need a good credit score for either option. Whichever you choose, if there's an annual fee, make sure the perks and rewards offset it.
2. HELP WITH BUSINESS EXPENSES
Getting started may require out-of-pocket investments. Applying for a separate credit card can snag you a sign-up bonus or a zero-percent introductory interest rate that helps defray or finance those costs, and ongoing rewards can maximize your income if they align with your spending.
For Nicole Elizabeth, content creator at the blog NElizabeth, a flat-rate business credit card made sense when she started her Etsy shop .
Elizabeth earned rewards on large, one-time investments like her cutting machine, printer and computer — essentials for making the stickers she sells on Etsy. She now earns rewards on recurring expenses such as paper, ink, toner and blog-related purchases. "I get 1.5 percent back on everything," she says.
Her goal is to turn her side jobs — her blog, YouTube channel and Etsy shop — into a personal brand.
"Ultimately, I'd love for my business to grow and be my full-time job," Elizabeth says.
3. DOUBLE-DIP ON REWARDS
Whether you're on the growth track or simply earning a little extra scratch, look to your credit card — and beyond — for opportunities.
- Ride-hailing drivers. A credit card that earns a high rewards rate on gas can add up to hundreds of dollars annually for drivers. Before he switched to an electric car, Campbell was using his business credit card to earn 2 points per $1 spent on gas. But he also maximized savings by using the Shell Fuel Rewards program and special offers from Lyft.
- Airbnb hosts. A rewards card that earns 5 percent back on spending categories that change quarterly could offer a significant return on any number of purchases to furnish or spruce up your Airbnb property. But you can also earn additional rewards by shopping with specific retailers on online shopping portals like Ebates, or via your credit card's bonus mall.
- Pet sitters. A flat-rate credit card that earns 2 percent back on all purchases can offer value at the pet store, or anywhere else. But you can also sign up for a pet store's loyalty rewards program for additional discounts.
Combining a rewards credit card with a rewards program is another way to tip yourself with cash back, airline miles or points.
This article was provided to The Associated Press by the personal finance website NerdWallet. Melissa Lambarena is a writer at NerdWallet. Email: firstname.lastname@example.org. Twitter: @lissalambarena.
NerdWallet: How to choose a rewards credit card
Experian: Business credit vs. personal credit