Whilst it is a common occurrence for most startup businesses to struggle to find customers within the first few weeks, once you’ve started taking in some pay checks, it’s important that your business is set up in order to receive payments. Before you even begin to take payment from customers, it’s important that you have a place set out ready for you to stash your money, and although there is no special licensing or permits needed in order to start accepting money from customers, you should be aware of a variety of business basic guidelines for accepting payments that will need to be adhered to, especially if you’ve set up your business with a different name from your own. We’ve put together a handy guide to get you started setting your business up to start accepting payments from customers and making some money.
Set Up a Business Bank Account
If you have set up a business in your own name you can accept payments into your own personal account, however accepting business payments from customers into your personal bank account could only end up making things confusing for you, especially if you have all of your personal outgoings paid out from the same account as well. In order to keep things simple and streamlined, it’s essential that you set up a bank account for specific and sole business use. If you have incorporated your business and it has a corporate name, it is mandatory that you set up a specific business account with the company’s name in order to deposit any payments made to your company.
Obtain a Tax ID Number
In order to open a business bank account, you must firstly obtain a tax ID number from the IRS. Once the IRS has issued you with this, you will then need to also obtain a tax ID number from the state in which you wish to do business. In order to get a federal tax ID number, you are required to fill out Form SS-4 which you can get hold of on the IRS website, and send it to the IRS office indicated in the instructions. There is no fee for this, and most IRS offices will issue you with a number within a few weeks of receiving your application form. When applying for a state tax ID, you will be asked to produce your company’s documents of incorporation and your corporate seal.
Apply for a Fictitious Name
If you decide that your business will remain a sole proprietorship or a partnership but wish to do business under another name, (known as DBA), you will be required to register your fictitious name with your city, county or state in order for the bank to allow you to open a business account. In the majority of states, all you will need to do is visit the county offices where you will need to pay a registration fee to a county clerk, whereas in some states you will need to place a notice in a local newspaper. The cost of filing a fictitious name ranges from $10 to $100, and in most cases corporations will not be required to file a fictitious name unless they do business under a name other than their own.
Apply for a Merchant Account
For most businesses, it makes sense to accept payments other than cash, such as credit card payments. This is because more and more customers are choosing credit card as a way of making payments and not having this option available could be detrimental to a company’s levels of profit. In order to set up your business to accept credit cards, you will need three things: a credit card merchant account, a business bank account, and a way in which to process payments. A merchant account will allow your customers to make payments using credit cards such as Visa, American Express and MasterCard and will allow these payments to be transferred to a bank account which is delegated by you, usually your business bank account.
Using Online Payment Systems
If your business has an online store, you will need to consider the use of online payment systems. If you have a merchant account and your business is set up to accept credit card payments this can also be done online, but keep in mind that many online customers prefer to use other, more secure systems. PayPal is a popular payment system used by many to buy items online, and it’s simple to set up a PayPal business account and add a ‘Buy Now’ button to your site.
Which payment methods does your business accept?
