Paying fees for accepting money is a bit of a bummer, I get it. You worked hard for the money you got for the product/service you sold and you don’t feel like giving away 3% of that. The problem is when you try to get around that by accepting payments via Paypal, Venmo, or the Cash App using the free, personal versions, it’s no good for your business and I’m here to explain why so let’s dive in.
The first reason you shouldn’t be using Venmo and other free versions of accepting payment is that there is a higher risk of scams or fraud. We’ve seen it multiple times with our clients and you can read stories all about it on the internet – people who were scammed out of their money on Venmo or Paypal and they had to fight really hard to get it back. Bottom line, the level of protection is not the same as if you were using a true invoicing software.
The second reason you shouldn’t use these payment platforms is that you’re breaking the rules and who wants to be a rule-breaker? NOT me! That’s right, Venmo, Paypal, the Cash App, etc all state that the free, personal versions are supposed to be used to send money between friends and family, not business transactions. I don’t know about you but I like to play by the rules and I don’t have time to worry about being caught for something so silly! Pro tip: It’s better to be safe now than to be sorry later.
The last reason you should avoid these forms of accepting payments is that it’s nearly impossible to do accurate bookkeeping based on the info in there, especially if you have a bookkeeper handling the books for you. When you receive payment from someone on those personal accounts, they usually don’t contain any info at all other than the date and the dollar amount. Imagine your bookkeeper looking at your bank feed to see a $1,000 deposit received from Sally Smith but has no idea what it was for. And, if you are doing it on your own – you’re probably wasting time trying to remember what that was for when it comes time to record it in your books. To save you and your bookkeeper some time, do not use these free platforms!
So, what do I recommend instead? I always recommend using official software like QBO, Dubsado, or Honeybook if you are service-based or something like Square if you are product based. Yes, they have fees but did you know those fees are a tax deduction? That’s right, they are an easy expense for your business. Plus, you can easily build that 3% fee into your pricing, and your customers will not even know or bat an eye to it. For example, if you usually sell a course for $5,000, go ahead and bump up the price to $5,150 to include that 3% fee you would be paying for. That $150 will not sway your customers from purchasing your quality content and now you don’t need to worry about that extra fee.
If you’ve made the mistake of accepting payments this way, it’s ok – you are not alone and you can easily make the switch to a new method. Are you wondering what other mistakes you might be making in your business bookkeeping? Check out this video where I talk about the 3 top bookkeeping mistakes and how you can avoid them.