Virtual Payment Providers: Keeping Personal Accounts Away From Your Business
As consumer transactions become more and more cashless, virtual payment providers like Venmo or CashApp are growing more popular, especially among Millennials and Generation Z. These person-to-person and person-to-business money transfers make purchases from small business owners, freelancers, and side hustlers easier. However, it is important to keep your personal virtual payment account distinct from your business’ virtual payment account. To do this, setup a business bank account or a PayPal account.
Typically, the first step in separating yourself and your business — legally and financially — is forming a Delaware LLC. This limits your personal liability. Typically, if ever a lawsuit is brought against your business, your personal assets cannot be used to settle business debts. Also, the way you conduct business should reflect the separation between you and your business. Linking business transactions to a personal Venmo or CashApp account is typically not a good idea. Accepting virtual payments and creating a business account is typically a best practice, and it is rather simple.
In creating a Venmo Business account, you can link the account to a business bank account and start receiving payments from clients almost immediately. Keep in mind, there are a few differences and downsides to Venmo Business. Unlike in personal accounts, Venmo Business charges varying fees for processing payments that can range anywhere from 1.9% + additional processing fees per dollar. Also, non-profit corporations are not currently able to use the Venmo service as of December 2021.
While Venmo for Business is straight-forward for one-time sales, it does not provide much support to its business clients. Venmo for Business does not invoice or allow reoccurring payments. Every payment made will need to be initiated on a sale-by-sale basis and individually tracked in another way for accounting purposes.
If you do not plan to own a brick-and-mortar, virtual payments may be right for your business. If that’s the case and you don’t want to use Venmo Business, other payment options include PayPal, Apple Pay, Google Pay, and Zelle. Each of these other options provide the same type of service as Venmo for Business and are often seen as more credible to consumers. PayPal, Apple Pay, and Google Pay are also easy to integrate on websites or social media stores.
Starting a company, especially for the first time, can come with many challenges. Harvard Business Services is here to help form your Delaware LLC or corporation. Though we cannot assist in setting up a bank account, Harvard has recently partnered with BlueVine to provide our clients with quality online business banking. Harvard Business Services can also provide our highly-rated Registered Agent Services or virtual office and mail-forwarding service; and both come with lifetime customer support. Contact us today to see how we can help your company succeed.
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