Hacks with your own company?

Discussion in 'Mileage Runs/Travel Hacking' started by Jellypods, May 29, 2012.  |  Print Topic

  1. Jellypods

    Jellypods Silver Member

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    I have recently founded an LLC with the usual banking facilities.

    In addition to the corporate miles programme, I was wonderng about a couple of hacks e.g.

    1) LLCs can accept credit cards for services/goods. It can also make refunds via other transfer mechanisms.

    2) Sometimes LLCs need loans from shareholders, which could perhaps be via a credit card payment. They then repay these loans, plus interest and loan processing costs.

    I cannot be the first to consider these topics, surely?
     
  2. FlyingBear
    Original Member

    FlyingBear Silver Member

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    Not the first one, for sure. You are not mentioning exactly what you have in mind there, but depending on the use, both of those can have AA.
     
  3. jasher926

    jasher926 Silver Member

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    Good idea, but I imagine the problem is that if there are too many charge backs (even to other forms of payment), the credit card processor will shutdown your account. I think when you setup an account there are specific agreements with the payment processors not to have too many refunds.
     
  4. Jellypods

    Jellypods Silver Member

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    Well I could buy some services from my own company, get points credit, and then decide I don't want the services after all and get the refund via bank TX. The company would bear the payment processing fee, which would be about 1.5%-2% - relatively cheap per mile... I guess you could do that a few times a year, as long as your tax advisor and auditor didn't jump up and down with apoplexy!

    For the loan it is basically the same: pay the loan via a credit card, the company repays via bank TX and adds on costs and interest. The money circulates with a small % charge for fees, but in this case all charges flow back to you as legitimate loan-related costs. Again you could repeat several times, or use large amounts.

    Of course a truly unethical thing would be to set up a company solely for these purposes... Probably going to be some issues with that!

    There must be other ideas out there.
     
  5. Casey Friday
    Original Member

    Casey Friday Silver Member

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    My main business is web development, which doesn't allow for any easy mile earning; however, my side business is reselling, which is all about the mile earning. I'll usually buy Mac desktops and laptops, max out their RAM and add a SSD, then resell them on craigslist or ebay for profit+points. I've gotten quite a few points using this technique, and it adds a nice side income, too.
     
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  6. Jellypods

    Jellypods Silver Member

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    I don't think the credit card company would see any charge backs at all, or at least that was my thinking.

    The repayment or refund would be via a normal bank account, cash, or check, not via the credit card company. As far as the card company is concerned the purchase stands; it is only between the company and purchaser where the repayment happens and that can be via any other route you choose.

    The credit card company will get their transaction fee and the repayment from the card holder - nothing unseemly there. My concern was more on the way a company auditor would view all those purchases/refunds to the same person - from one point of view it is just paperwork, from another it might create some unwelcome tax questions (I am not a tax lawyer, thank God).
     
  7. Andyc24_uk

    Andyc24_uk Silver Member

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    Along similar lines... If you have a card which rewards you for spending, and another bank account not linked to that card; then could you not set up an Ebay seller account connected to the bank account; list something valuable like a computer on Ebay at a high price with 'Buy it Now' option, and then as soon as it appears in the listings, use your credit card to effectively buy it from yourself? The money goes from your card into your other bank account, you get the points for having used it, and use the money as soon as it lands in your account to pay off your CC bill immediately? Only cost would be the Ebay listings fees... Your risk would be in someone else coming in and bidding for it before you had the chance to, but this could probably be avoided by listing at an over-inflated price. No idea if this is feasible or if there are mechanisms in place to stop it; just an idea that came to me when reading the above...
     
  8. Casey Friday
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    Casey Friday Silver Member

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    Ebay would likely define this as fraud/money laundering and prevent it from happening, if not punish you for doing it.
     
  9. yaychemistry

    yaychemistry Silver Member

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    Legality questions aside, I have a feeling the overhead (e.g. what the c.c. processors and banks skim off the top) would cost more than what the miles are worth.
     
  10. FlyingBear
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    FlyingBear Silver Member

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    I meant you are not the first one to come up with this idea.

    And the way you are describing is precisely the reason you don't see much discussion about it. First approach is questionable at best, second one will be fun to explain whenever you get audited.
     
  11. SOLTATIO

    SOLTATIO Silver Member

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    While ethically I think both methods are questionable and need to be approached with caution, I applaud the OP for continuing to think outside the box. Thinking like that is what has brought about great mileage/fare saving opportunities like FDing / the Mint / Gift Cards.
     
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  12. jkchan83

    jkchan83 Silver Member

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    As someone who has a side retail business, I completely understand where the OP is coming from. The thought had crossed my mind, too. However, I ended up in the same position as SOLTATIO where I said that it was too questionable, particularly since it is a true side business (income, expenses, taxes, etc.).

    I applaud the OP for thinking about ways to turn the rules to our advantage. But it just seems too risky to me.
     
  13. Jellypods

    Jellypods Silver Member

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    How about a slight twist: The person purchasing the goods or services and earning miles is not the company owner?

    You offer them a no-quibble, money-back, satisfaction guarantee, as many businesses do, and for whatever reason they are unhappy/change their mind a few days later?

    It is not like this doesn't happen: I once returned a Breitling watch a fee days later, worth several thousand dollars.

    It still sounds a bit dodgy... I think going in to a purchase with such an intent is the difficulty, ethically (and probably also legally).

    But the loan idea is one I am still pursuing as I think that is a legitimate payment and repayment; the loaner is just choosing to pay the loan injection to the company via his/her credit card, such loans happen all the time. I will ask my accountant and let you know.

    JP
     
  14. TravelBear

    TravelBear Gold Member

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    So, if I knew a small business owner that would say charge me $X on my cc, then I requested a return in another form that would be doable, minus cc fees, that would be doable?
     
  15. MSPeconomist
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    MSPeconomist Gold Member

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    Instead of asking here, it would be better to get professional advice from an accountant and a tax lawyer before starting to get involved in any of these schemes. You would need also to read and understand the CC merchant agreement.
     
  16. pnoeric

    pnoeric Silver Member

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    I like all this out-of-the-box thinking but I'd start by doing the math. Maybe you have a killer deal, but my merchant account charges me 2.5%. I legally can run my own card through it all day long (they don't care, they make their $)... but it's not worth it for me to pay $25 to earn 1000 miles, no matter how I slice it and dice it ;-)
     
  17. TravelBear

    TravelBear Gold Member

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    But, if you are short say 5k spend to achieve a bonus of MQMs on your cc ( like the AE card offers) which will either keep you at current status or bump you to next level, or give you a good start on MQMs since they rollover.....then would it be worth it?
     
  18. pnoeric

    pnoeric Silver Member

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    Oh, sure, as a short-term hack, it's nice to know I can generate credit card sales right here in my house. (And anyone can do the same thing by sending money to a friend via PayPal, or Square...) But the fees are obscene when you compare them to other ways to generate the money. I mean, if I needed 5000 miles, at my 2.5% merchant account rate, that's costing me $125. That's a lot of dough for something that, hopefully, I could plan out so I wouldn't need to scramble. But yes-- depending on the situation, it's another tool in the toolbox.
     

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