Why You Can’t Use Venmo for Business TransactionsPat Fontana
Operating a successful business involves planning, marketing, producing goods or services, and having a way for your customers to pay for those goods or services. You will also need a way to track those payments, so you can maintain accurate and current financial records. While there are a number of invoicing and payment systems available, only a few are appropriate for business transactions.
BUSINESS VS PERSONAL TRANSACTIONS
Virtual payments are becoming more popular. They are convenient and, for the most part, secure. As a business owner, you may prefer that someone pay you online rather than hand you cash or write you a check. When choosing an online payment system for your business, it is wise to research all the features of each one to determine whether it works for your needs.
Many of the more popular virtual payment systems were designed for personal transactions. In fact, some actually prohibit business transactions. While Venmo is used between friends, for example, to divide up a restaurant bill or to pay back a debt, it is generally not a good idea to use it for business transactions.
WHY VENMO IS NOT IDEAL FOR BUSINESS TRANSACTIONS
Venmo was designed for individuals to send money back and forth between themselves for personal reasons. It was not designed for business use. In fact, the site itself warns again sending “a Venmo payment to someone for a good or service,” stating that you “could lose your money without ever getting what you paid for.”
The site further explains that Venmo may actually reverse the payment after review if “you accept a Venmo payment from someone for a good or service.” It states explicitly (often in all caps) that you cannot use Venmo to “receive business, commercial or merchant transactions, meaning you CANNOT use Venmo to accept payment from (or send payment to) another user for a good or service.”
However, Venmo is expanding its plans for accepting commercial transactions. Venmo use for businesses is currently in a limited release phase. At present, to be able to conduct business transactions without fear of having the payment reviewed and reversed, a business must complete an application and receive explicit authorization to participate in Venmo.
Other issues for businesses who might be considering the use of Venmo include the fact that it does not offer buyer and seller protection for business transactions. Also, there are no invoicing options such as those needed by most businesses for billing customers.
BETTER BUSINESS OPTIONS
For the business owner wanting more from a payment system, there are other options that are more appropriate and more useful. You will certainly need a system that enables you to invoice, to track payments, to keep personal and professional expense separate, to complete your tax forms, and to be able to pay accurate quarterly taxes.
As the owner of a growing business, you also need a payment system that will grow with you. Many of the virtual systems are designed primarily for very small businesses and entrepreneurs with simpler needs. If your business is more complicated, offering a variety of products or services, you will need a payment system that works better for those needs.
A virtual payment system that is promoted as a way for friends to pay each other may not carry the best image for your business either. As a professional businessperson, you want a payment system that tells your customers you are serious about your invoicing and payments.
One of the better options for business transactions is QuickBooks from Intuit. You can invoice through QuickBooks and your customers can pay online, either using a credit or debit card or with an electronic check option. While the customer does not write a paper check, the money is automatically transferred from their checking account to your business account through what is known as an ACH (Automated Clearing House) transfer.
QuickBooks will also help you at tax time, as it keeps a running total of your income and your expenses, which can be categorized so you’ll know how much you’ve spent in certain areas that may be deductible. For example, you can categorize expenses for printer ink and staplers into “office supplies” so you’ll have a total for that category at tax time.
Clear View Business Solutions can help you navigate QuickBooks or do it for you! We provide financial advisory, accounting, and bookkeeping services to small businesses and nonprofits in the Tucson area. e Consider contacting us about taking some of the weightier tasks, such as invoicing and receivables, off your plate. We’ll present you with a clear view to financial success.