Most new firms struggle to locate clients, while some kickoff and make a customer base for themselves. A huge concern for these businesses is how to accept payments.
First, they will have to find a safe place to keep the money. While you don’t need any special licenses or permits to begin receiving payments from customers, there are several business fundamentals to be aware of—especially if you’ve incorporated your firm under a name other than your own.
- Establish a business bank account.
If the business operates under your name, you can request your clients make checks payable to you and deposit them in your account. However, if you have incorporated your firm and chosen a corporate name, you must first open a business checking account to deposit checks made out to your company.
- Obtain a tax identification number.
To open a business bank account, you must first obtain a tax identification number from the IRS. After the IRS grants you a number, you must obtain a Tax ID number from the state where you wish to conduct business at no cost. Most IRS offices will mail the number to you within two to three weeks of receiving your Form SS-4. To acquire your state tax ID form, navigate the Tax and Accounting Sites Directory and select “State and Local Tax.” The bank will also need a copy of your company’s articles of organization as well as its corporate seal.
- Request a fictional name.
If you wish to remain a sole proprietorship or partnership but conduct business under a fictitious name (DBA). You first register your fictitious name with your city, county, or state before your bank allows you to open a business account. You have to go to the county clerk’s office and pay a registration fee. In other states, you must publish a notice in a local newspaper. A fictitious name notice costs between $10 and $100 to file. Most states will not require corporations to file fake names unless they conduct business under names other than their own.
- Create a merchant account.
If you wish to take credit card payments, you must first set up a merchant account. You’ll need three items to accept credit cards: a credit card merchant account, a bank account, and a payment processing system. A merchant account allows payments made by your customers using Visa, MasterCard, American Express, and other credit cards to be routed to the bank account you choose. You should anticipate spending $50 to $200 in start-up fees and monthly and per-transaction fees. Monthly statement costs normally range between $4 and $20, while transaction fees often range between 5 and 50 cents for each item.
- Examine internet payment systems.
PayPal, the world’s largest online payment system, allows customers to use their credit card or checking account to send money to anyone having an e-mail address. PayPal can be a cost-effective way for businesses doing business online to collect payments. Depending on your company’s sales volume, PayPal charges 0.7 to 2.9 percent of the transaction plus 30 cents for each order. Fix a “Buy Now” PayPal button to your website, and your clients will be able to pay with their PayPal accounts. The payment is then processed and paid immediately to your merchant account, and the customer is directed back to your website.
If you integrate these strategies, your business will seamlessly accept payments from most parts. However, before selecting any payment platform, ensure you understand all costs, including hidden fees.
Author bioContent crafter Alex Wilmont has been active in the payments industry and pinwheel pay reviews for over 15 years. He lives simply, gives generously and loves his 2 dogs. His mission is to enhance and innovate the fintech industry for years to come.