Setting Up Your Business to Receive Payments (What You Need to Know)

When you go into business for yourself, there are so many things to consider and set up. You need to get a website, outline your services, create products, determine how you’ll deliver goods, etc.
The one obvious thing that’s easy to forget is figuring out how you’ll receive payments. You may or may not want that first check to actually be a check so it’s important to set your business up to receive payments.
Here are some key things you can do.
Obtain a Tax ID Number
This is one of the first steps you should take to set your business up to receive payments. You can still accept payments without a tax ID number, but it will be under your personal social security number as a sole proprietor.
However, if you want a business bank account and a merchant account, it’s best to set up your tax ID number through the IRS.
Obtaining this will also make it easier to sort through business income and expenses come tax time.
Open a Business Bank Account
When you get paid the money has to go somewhere so it’s crucial that you open a separate business bank account. Most traditional and online banks offer a business checking account option.
Read the terms in detail and be mindful of any fees that could come up as well as how you can avoid them. With a business bank account, you can also set up direct deposit with clients and allow them to deposit checks directly into your account.
Set Up a Merchant Account
A merchant account is a type of business bank account that will allow you to accept payments via debit and credit card transactions. When a customer pays for a product or service, the funds will initially be sent to your merchant account.
From there, the payment can be transferred to your business bank account. Most merchant accounts will charge you a startup fee, a fee per transaction, and quite a few other fees so keep this in mind.
Consider an Online Payment Processing System
This is an alternative to a merchant account that may actually save you money. If you want to set up your business to receive payments online, you can choose options like PayPal or Due to help you send invoices and accept payments from clients and customers.
Transaction fees for Due are low and customers also get live account monitoring, chargeback protection, fraud prevention along with reports and analytics.
Most business transactions are conducted via credit card these days anyway so being able to accept these types of payments with ease is vital.
Credit Card Reader
If you’ll be handling payments from customers in person, consider investing in a point of sale card reader. Having this will allow you to securely set your business up to receive payments if you operate a brick and mortar location.
Square and PayPal are two of the most popular options and have transaction fees ranging from 2.5% to 2.7% currently. Many companies will even allow you to obtain your initial card reader for free. For example, PayPal runs some promotions where you can get your card reader for free.
Accepting payments should be the easy part when it comes to running your business. Luckily, it’s not difficult to set your business up to receive payments. Plus, you’ll be more than motivated to take action once you start preparing products and services to sell.
Choose which option works best for you when it comes to accepting payments and don’t be afraid to have multiple options ready to go.

Risk of Identity Theft is a Costly Proposition for SMBs

Much like individuals, businesses can be victims of identity theft. However, unlike personal identity theft, it is often unclear how a Small and Medium-Sized Business (SMB) can recover from the financial and reputational impact. Business identity theft occurs when criminals impersonate a company to target its funds, file fraudulent tax returns, take out loans, or apply for lines of credit — all for financial gain.
Business identifiers, such as Employer Identification Number (EIN), Creditsafe Safe Number, D-U-N-S Number, or corporate credit card number, are often obtained as the result of a data breach, whether directly or via a third-party — meaning your business data was stolen when someone you do business with was breached. More than half of all SMBs have experienced at least one data breach in the last 12 months, and 60% of SMBs suffering a security incident close their doors within 6 months. And while no one can fully prevent a data breach, it is crucial to recognize the signs that your business identity is at risk, and from there, take the appropriate steps to protect what you’ve built so that a compromise doesn’t result in an even more devastating outcome.
Signs and Consequences of Business Identity Theft
In addition to data breaches, criminals target your sensitive business information through scams such as phishing emails, W-2 scams, delinquent utilities, office supply scams and more. Identity thieves are continually revising their methods to get their hands on this data, as the payoff from business identity theft is much greater than individual-focused scams.
SMBs make attractive targets because of their large account balances and higher credit limits, and the networks they are a part of which provide a gateway to the data of larger companies. They are seen by fraudsters as easy prey as SMBs often have a minimum of data security and lack of resources to investigate such incidents. As a small business owner, the financial impact of identity crime may result in not being able to fund payroll or pay your taxes, bills, and suppliers — all of which can negatively impact your business’ credit score. Beyond an SMBs own financial accounts, business identity theft can result in reputational damage, operational disruption, and regulatory actions.
There are five major signs that may signal that your business has been targeted by identity thieves:

You receive a rejection notice from the IRS claiming a return was filed using the same Employer Identification Number (EIN), or receive an unexpected tax transcript.
You notice unusual charges made to your business account or receive bills for items your business never purchased.
You find records of bank accounts and credit cards opened under your business’ name in your credit file.
You receive notices from debt collectors for unknown purchases.
You no longer receive expected business bills or other mail.

Seven Steps for Recovering from Business Identity Crime
Act fast and consider the following when recovering your business assets:

Notify your financial institution and credit bureaus to freeze your business accounts immediately, deterring additional fraud from occurring.
Notify the appropriate government agencies such as the IRS, BBB, FTC and file a police report stating that your business is a victim of identity theft.
Keep a record of all fraudulent activity and reports.
Notify your vendors and suppliers if they are affected.
Monitor your bank account statements and credit report for suspicious activity.
Close any accounts that have been opened or tampered with as a result of identity theft.
Arm your business with Small Business Protection to defend your company and your employees from the fallout of identity theft.

Identity theft can be a stressor for any small business, especially if you are unsure how to recover its identity.
Tips to Protect Your Business Identity

Update your security measures. From your antivirus software to business passwords, make appropriate updates to ensure all devices and accounts are protected.
Encrypt your data. By using encryption, if fraudsters get a hold of sensitive personal or business information, it will be rendered useless.
Remain vigilant in monitoring your accounts. Even after a case has been resolved, your business identity is still at risk. Continue to monitor your financial and credit accounts.
Safeguard your employees. If your SMB is compromised, it can affect everyone attached to the company. Offering identity theft protection as an employee benefit will help alleviate the stress and loss of productivity.

IRS proposes update to Form W-4 to increase accuracy

By SARAH SKIDMORE SELLAP Personal Finance writerThe IRS has proposed an update to the Form W-4 that it says will increase its accuracy, reduce its complexity and help avoid surprises at tax time.
However, experts caution that it will feel different to employees and may prove a bit more difficult for some.
Employees currently fill out a one-page form that asks a few questions about their household to help their employer determine how much to withhold from their pay for federal taxes.Read more on

Got a $100 million tax bill? Your check is no good at IRS

WASHINGTON (AP) — No checks, please. Starting next year, your check won't be any good at the IRS — if you're making a tax payment of $100 million or more.
The IRS says it will reject all checks for more than $99,999,999 because check-processing equipment at the nation's Federal Reserve banks can't handle checks that big.
Checks of $100 million or more have to be processed by hand, increasing the risk of theft, fraud and errors, according to a pair of memos from the IRS and the Treasury Department.
As a result, the richest among us will have to wire their tax payments electronically.Read more on

Does Your Nonprofit Need an Independent Audit?

When it comes to audits, an independent nonprofit audit is different than an IRS audit. An independent auditor, who should be a Certified Public Accountant (CPA), completes an independent audit. These audits are an examination of your financial statements and accounting records. Once a nonprofit audit is completed, the auditor will give your company a report that expresses an independent opinion on your financial statements.
When You May Need a Nonprofit Audit
While the IRS does not require audits of nonprofit organizations, other government agencies do. Around one-third of all states ask that nonprofits that meet a particular annual revenue size be audited if they use funds from state revenue. There are other circumstances that may require your nonprofit to have an independent audit completed. These may include:
The board of directors of the nonprofit organization may think it is advantageous to have an audit for the purpose of future budgeting, reviewing trends, and understanding the IRS Form 990.
Donors may request to review your audited financial statements to ensure their funds will be used wisely
Charitable nonprofits that expend federal funds to the sum of $750,000 or more in one year.
Nonprofits who have contracts with state or local governments that allow you to provide services within your state or county.
Your state laws require all charitable nonprofits to submit an audited financial statement.
When submitting a grant proposal a private foundation may ask you to provide your most recent audited financial statement.
If submitting a loan application, a bank may require an audit.
When your nonprofit is asked to provide a nonprofit audit statement, it is good if you have already had a recent audit completed. This way you can provide the information efficiently. If you feel your company is too small and an independent audit may be out of your budget, you can ask the requestor if providing alternate financial information would meet the criteria.
This post originally appeared on Ernst Wintter & Associates’ blog.