Welcome to another week of Merchant Maverickâs essential news roundup for small business owners.
This week, JPMorgan Chase announced its own mobile payments reader while a survey hinted that office spaces will shrink in the future. Read on through for the weekâs top five must-know stories for small business owners.
JPMorgan Chase Announced A Mobile Card Reader
In an effort to broaden its business services, JPMorgan Chase announced the launch of a new card reader that can take payments on the go. Dubbed QuickAccept, this mobile payments platform will allow merchants to ring up credit card payments via a mobile app or a contactless card reader — much like tools offered already by Square and PayPal. Unlike those other services, however, Chase’s new platform will deliver merchants the money made from sales on the same day for free (Square, for comparison, charges ~1.5% for instant transfers).
To work alongside the new payments platform, Chase also announced a business checking account called Business Complete Banking. Nothing is really special about this checking account, although you will need to open one if you want to take advantage of QuickAccept.
Why this matters to you: Competition is almost always welcome, and Chase’s new platform could provide some spark to the world of mobile payments. If QuickAccept’s free same-day funding takes off, merchants might wind up with more avenues for taking credit card payments cheaply in the future.
Over 75% of CEOs Expect Office Space To Shrink In The Future
In a survey of 171 CEOs across America, Fortune magazine and Deloitte found that 76% of those polled expect their company will need less office space in the future. Growing acceptance of smaller office space could be because many are finding remote work isn’t so bad after all — 40% of CEOs in the survey said employee productivity has gone up due to remote work.
Interestingly, Fortune/Deloitte’s survey comes on the heels of a different study about returning to work by workplace technology startup Envoy. That survey found that 73% of US-based employees worry about their health and safety at work. So even if some companies are ready to fully return to the office, most employees may be less keen to follow suit.
Why this matters to you: The COVID-19 pandemic will almost certainly shape how humans work together in the future. And while shrinking office spaces will impact commercial real estate negatively, there are some benefits to smaller office footprints worth noting. For instance, Americans are still driving less on the roads, even as more and more places are reopening. Remote work can also help reduce overhead costs.
Facebook Revealed Plans To Beef Up WhatsApp Business
In an effort to squeeze money out of its WhatsApp messaging platform, Facebook is set to make several additions to the business side of the service. To start, businesses will be able to sell products to customers within chats. Facebook didn’t say how exactly the in-chat shopping feature might be implemented, but it is supposed to work alongside businesses’ “existing commerce and customer solutions.”
Facebook is also launching a hosting service in “the coming months” that will include the ability for businesses to manage their WhatsApp messages. Finally, Facebook noted that some WhatsApp services for business customers will cost money, although specifics haven’t been revealed yet.
Why this matters to you: WhatsApp is a messaging platform that reaches over two billion people worldwide. The upcoming features for WhatsApp will especially be a boon for small businesses that sell online — in fact, Facebook says that the in-chat shopping experience is meant to “help many small businesses who have been most impacted in this time.”
Further reading: Has Facebook Finally Broken WhatsAppâRadical New Update Now Confirmed, Forbes
Outlook For Restaurant Isn’t As Bleak As Previously Thought
Despite the damage the pandemic has done to restaurants, there is hope yet. Moody’s moved its outlook rating for the restaurant industry from “negative” to “stable” last week. The investor service predicted that there will be “slowly improving business conditions” during the next 12 to 18 months and that the industry’s operating profit will grow by around 15% in 2021.
However, restaurants aren’t out of the woods yet. A recent Bloomberg report discussed restaurants that have opened up outdoor dining during the pandemic must innovate once again to survive the cold winter months. For many, winterizing an outdoor space may be too expensive — outdoor headers often cost between $1,000 and $1,500 a pop.
Why this matters to you: A glimmer of hope for the restaurant industry shines a beacon across the entire economy — businesses that serve food have been hit hard during lockdowns. Still, it’s important to stay vigilant. COVID-19 remains a deadly virus, and coming up with safe protocols while remaining profitable will be a tall order for many small businesses, including those beyond the restaurant space.
Further reading: Off-Premise Sales and Non-Traditional Payment Options are Top of Mind for Restaurant Franchisees in COVID-19 Landscape, TD Bank
Entrepreneurship Is On The Rise
Alongside a rise in joblessness has come a rise in entrepreneurship. According to data by the U.S. Census Bureau, new businesses filed 1.5 million Employer Identification Number applications in the third quarter of this year — an 82% jump year-over-year. The Midwest and the South both saw steep rises in particular.
MBA applications are also soaring as people look to boost their professional skill set. A survey of the top 25 US business schools by Poets & Quants found that the number of applications is up an average of 22.6%. USCâs Marshall School of Business leads the pack with a 66.4% increase in applications.
Why this matters to you: The drastic unemployment stemming from the COVID-generated recession is almost certainly encouraging more and more to try their hand at running a business. If you’ve recently started your own business, or are seeking an MBA to help with a business venture, you are not alone. There are plenty of others out there who will (hopefully) succeed right along with you.
Further reading: Entrepreneurship Is the Vaccine for Urban Economies, Bloomberg
The Latest From Merchant Maverick
The Paycheck Protection Program and Economic Injury Disaster Loans struggled to adequately help many small businesses during the early stages of the pandemic. Learn what exactly went wrong from our readers’ perspectives:
Top 5 Reasons Why Small Businesses Were Denied Government Funding During The COVID Crisis
A Texas farm has been in the news recently for helping special-needs children play and hang out with animals that require special needs, too.
Run as a non-profit organization called Safe in Austin, the farm is home to over 150 animals who are injured or need some type of additional support. Among the residents include a rescued turkey born with a claw abnormality and a calf with a birth defect that fused its legs and spine together.
“There is something absolutely magical about watching a child with differences come out here and say, ‘Theyâre just like me,’ ” said Safe in Austin founder Jamie Wallace-Griner. She added: “We have animals that are blind or deaf, have diabetes, cerebral palsy, deformities, missing limbs, broken spines â¦ they all become part of our family.”
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Chaseâs New Mobile Card Reader Takes Aim At Square & 5 More Small Business News Stories You Need To Know appeared first on Merchant Maverick.
By now, you’ve probably heard of Facebook Pay — yet another new way of sending and receiving money. People use it most often to transfer funds between family and friends, but can it also be a good option for online businesses?
The answer is yes, it can. Read on to learn more about Facebook Pay, then decide whether it’s right for your own small business.
What Is Facebook Pay?
Let’s face it: People are doing more and more of their shopping online. And anything that makes it easier for them to find and pay for the things they need sounds mighty attractive.
Launched in 2019, Facebook Pay is still a relatively small service â but one with big plans for growth. Right now, it’s available in the United States on Facebook, Messenger, and Instagram, and it’s also available, primarily through Facebook, in some other countries in Africa, Europe, Asia, Latin America, and the Middle East as well as Canada. Plans are underway to add Facebook Pay to WhatsApp soon.
If you’re already using Facebook or Instagram as a part of your online sales strategy, it’s worth taking a look at Facebook Pay. After all, the more payment options you give your customers, the easier it can be to make sales to them.
How Does Facebook Pay Work?
Facebook Pay works in a fashion similar to other friend-to-friend payment options, like Venmo and Zelle. The difference (right now at least) is that Facebook Pay is available only to people who use Facebook, Messenger, and Instagram.
When people sign up for Facebook Pay, they agree to let Facebook store their credit or debit card information. That means they won’t have to pull out their wallet and enter all those numbers each time they want to make a purchase or donation within a Facebook setting. Facebook Pay works for:
Donations to charity and friends’ fundraisers
Purchases on Instagram
Purchases on Facebook’s Marketplace
In-app game purchases
Tickets for events
When you sign up for Facebook Pay and enter a valid credit card, debit card, or Facebook gift card, you’ll be able to exchange payments with people in your network and make contributions to their fundraisers. And they can do the same with you, all without leaving the Facebook or Messenger app or having to enter their information each time they want to buy.
Does Facebook Pay Cost A Fee?
If you’re tired of watching processing fees from third-party providers eat away at your profit margin, you’re going to love Facebook Pay. You’ll never pay any fees to send or receive payments this way.
When Should You Use Facebook Pay?
Facebook Pay is a simple, seamless, and secure payment option for anyone who uses Facebook or Instagram to pay for purchases, donate, or send money to friends and connections. It makes sense to use Facebook Pay when:
1) When You Have Something To Sell
List your handmade items or the unique things you offer for sale through your business. Post pictures and information on your Facebook or Instagram page, then invite your friends and followers to send you payment via Facebook Pay.
Post a link to your online store. Let your friends and followers know the kinds of things you’re offering, then tell them where they can go to get more details. Tell them how they can contact you to place an order â direct message and posting a reply on your page are two easy options â and let them know Facebook Pay is an easy way to exchange payment.
2) If You See Something You Want To Buy
You’ve been browsing through Facebook Marketplace and found something you can’t resist. Message the seller and ask if he or she accepts Facebook Pay, then send payment quickly and conveniently, for free.
A page you follow posts an announcement about a new item for sale. Send a direct message or post a reply indicating your interest, and ask if you can send payment via Facebook Pay. It’s a fast, free, and safe way to complete your purchase.
3) When You Want To Support A Fundraiser
A Facebook or Instagram friend posts information about a birthday fundraiser for a worthy cause. Don’t worry about finding your wallet. If you’ve signed up for Facebook Pay, your credit or debit card information is already stored, so you can support your friend and the good cause without going to any trouble.
A nonprofit you follow posts on its page about a special need or donation drive. Or maybe you are just feeling generous and want to make a donation even when the group isn’t asking for anything right now. It’s easy to support the causes you care about when you are signed up for Facebook Pay.
4) If You Owe Money To A Friend
You went out for dinner and split the check? No problem. If your friend is on Instagram or Facebook, you can use Facebook Pay to transfer cash to cover your share of the bill before you’ve even left the restaurant.
Sending Money Via Facebook Pay
Using Facebook Pay is pretty easy, whether you’re the one sending or receiving money. The first thing you’ll need to do is sign up for the service. So head on over to your Facebook account settings â you can get there by clicking on the triangle at the top right of your screen. (It’s probably right next to the notifications icon.) Next, click Settings and then scroll down until you see Facebook Pay in the menu on the left side of the screen.Â If you want to use Facebook Pay on Instagram, go to Settings, then Orders and Payments, to enter your payment method. If you’ve already saved payment information to either Facebook or Instagram, that payment method will be available to Facebook Pay right away.
Facebook says that more than 99% of payments are processed immediately, and any payments that don’t process are reviewed within 24 hours.
Receiving Money Via Facebook Pay
If you want to set up your own account so that you can receive payments via Facebook Pay, the first step is to sign up for the service yourself.Â Your next steps will depend on how you’re using your social media account to sell.
If You Sell Only To Your Contacts…
Many small businesses sell successfully on Facebook and Instagram using simple techniques. If your sales plan involves posting information and photos about items you have for sale and then connecting with your friends and followers who indicate interest, you can ask them to pay via Facebook Pay.
If You Sell On Facebook Marketplace…
Once you connect with someone who is interested in purchasing an item from you via Facebook Marketplace, you can use Messenger to set up payment using Facebook Pay.
If You Have A Facebook Or Instagram Store…
Facebook Pay is designed for individual use, according to a Facebook representative. So it’s not available as an official payment option for your online store. However, you can connect with your customers through your page or via Messenger to set up payment using Facebook Pay.
No matter how you arrive at the point of sale, once you have someone interested in buying something from you online, let the buyer know that you can accept Facebook Pay. The buyer can arrange payment via Messenger.
And once your buyer sends payment via Facebook Pay, how long will it take until you receive the money? Facebook says that more than 99% of payments are processed immediately, and any payments that don’t process are reviewed within 24 hours. The money will be transferred to your registered account right away, although it’s up to your bank to post funds to your account.
Is It Safe To Send & Receive Payments With Facebook?
Beyond that, these measures have been put in place to protect Facebook Pay users’ information:
Anti-Fraud Technology Monitoring: You’ll be alerted if unauthorized activity is detected.
Customer Support: Report unauthorized transactions via email 24/7 or by live chat between 6 a.m. and 6 p.m., Pacific Time.
Data Security: Payment data is encrypted for storage, and payment methods are not shared with buyers, sellers, or merchants without consent, and payment information is stored separately from account data.
Verification Methods: Use a PIN or biometric devices like fingerprints or facial recognition, whatever you use to protect your device.
Transaction Notifications: Receive in-app notifications when transactions process.
Privacy Related To Purchases: Transactions are confidential and not shared to users’ Newsfeeds, unless they choose to share
Facebook Pay VS PayPal
Facebook Pay can be a convenient payment option under some circumstances. However, compared to a bigger payment processing system like PayPal, Facebook Pay is probably best suited for small online businesses without an official storefront who rely on one-on-one contact with buyers through social media or who sell at least occasionally in person (at craft fairs or farmer’s markets, for instance) and want a fast, convenient, and no-fee way to accept money from customers.
Of course, there are other no-fee options you can use, too. An online service like Venmo or Zelle offers many of the same benefits â quick, secure, and free payment with fast delivery â without limiting your audience to those who use Facebook and Instagram.
For bigger businesses or for those that want to open an online store, choosing an option like PayPal may be a better move for you. Of course, if you start taking payments through PayPal, be aware that you’ll have to give PayPal a portion of each sale.
Should You Use Facebook Pay For Your Business?
With so many easy and convenient options for taking payments online, it can be hard to decide which one is best for you. The good news is, you really don’t have to choose just one. Because you can set up a free account on Facebook Pay, and you can receive payments with no fees, you don’t really have anything to lose by trying it out.
If you regularly connect with customers on Facebook or Instagram, let them know about all the payment methods you can accommodate. After all, the easier you make it for the customer to pay, the more likely you are to complete the sale and pocket the money.
The post What Is Facebook Pay & How Does It Work? appeared first on Merchant Maverick.
Entrepreneurs looking to build their companies from the ground up often face difficulties getting traditional debt-based financing. Banks, and even many alternative lenders, prefer to do business with companies that have at least six months of operation under their belt, and preferably two to three years. And that’s before you factor in things like your creditworthiness.
One way around the debt-financing conundrum is to enter the world of investor financing. While equity financing is probably the more well-known method of investor financing, another option is revenue-based financing.
What Is Revenue-Based Financing?
Revenue-based financing grants investors a regular, ongoing percentage of a company’s income in exchange for a cash infusion. The investors receive scheduled payments until they’ve collected an agreed-upon amount of money from the new business.
Because this model relies on the business generating revenue, investors will want to see that you’re capable of producing the strong margins necessary to both continue to grow and pay them back. That means businesses planning on a slower growth model, or those that may not be revenue-positive for an extended period of time, are generally not a great fit for revenue-based financing, which is most frequently seen in the tech sector and adjacent businesses.
Funding amounts typically range between $50,000 to $3 million, with repayment expected in three to five years. Repayment caps, which are expressed as a flat multiplier, represent the total amount your investor is expecting to reclaim from you. This rate typically ranges from x1.35 to x3, although higher caps aren’t unheard of. In some cases, the investors may instead use a date or sustained rate of return as cut-off points.
How Revenue-Based Financing Works
Let’s say you’re an enterprising tech entrepreneur who has a great new app idea with explosive growth potential.
You’re even generating a little bit of revenue from your early customers, but need money to grow. You approach an investor or investment group that offers revenue-based financing, and they like what they see (your average monthly revenue has been $16,000, with strong gross margins). You’re not profitable yet, but you’re on the right track. The investor clears you for $1 million in revenue-based financing.
Interestingly, the $1 million generally will not be handed over to you in a lump sum but will function a bit more like a line of credit. In other words, you can draw upon it more than once, so long as your total draw doesn’t exceed the limit (note, however, that there may be restrictions on when and under what circumstances you can draw).
Let’s say you managed to secure a cap of x2 and eventually use all of your “credit.” The total amount you’d be expected to repay would be $2 million ($1 million x 2). You and your investor settle on a payment plan of 6% of your monthly sales, which have risen to an average of $40,000. You’d be paying around $3,200 a month. Assuming your revenue stays at that amount, you’d be paid off in a little over five years. If your revenue increases, you’d be paid off sooner. If it decreases, it would take longer.
Revenue-Based Financing VS Merchant Cash Advances
If you think revenue-based financing sounds a little bit like a merchant cash advance, you wouldn’t be too far off the mark. At their core, both are hedging on your future sales. Both are collecting a percentage of those future sales. Both have indeterminant term lengths due to being revenue contingent. And both are relatively costly ways to finance your business.
That said, there are a few differences between them, namely in terms of scale and scope. Merchant cash advances tend to be based solely on your credit and debit card sales, not your revenue. Payments are usually made daily rather than monthly, and the expected time until settlement is usually much shorter. At this time, merchant cash advances are also available to more companies than revenue-based financing, which tends to be aimed specifically at high-growth businesses like tech startups.
Revenue-Based Financing VS Venture Capital
Revenue-based financing sits adjacent to other types of investor-sourced financing like venture capital. Both tend to heavily favor high-growth industries like tech, and both tend to cater to entrepreneurs who normally would have trouble obtaining debt-based financing.
That’s where most of the similarities end. Venture capital is equity-based financing, meaning that you’re selling shares, or at least the option to buy shares. In other words, you’re giving up some of your ownership in your company. This model typically assumes that you intend to sell your company somewhere within a five to seven-year window. Revenue-based financing, on the other hand, does not transfer ownership to the investors. You’re also not expected to sell your company (in fact, doing so would likely complicate your arrangement).
Venture capital financing typically takes place over a series of rounds, with your company being able to access additional rounds of funding after they’ve hit specific milestones. Revenue-based financing generally isn’t as regimented, although there may be conditions upon when you’re able to draw on your funds.
When Revenue-Based Financing Is Right (Or Wrong) For Your Business
Revenue-based financing, like most investor-based financing, is not as widely available as debt-financing. This means most businesses won’t have the luxury of deciding whether or not it’s right for them–it simply won’t be an option.
For businesses that do fall into the revenue-based financing niche, you’ll need to weigh the opportunity cost of not taking the money against the financial cost of taking it. Will the growth financed with these funds, minus the burden it puts on your revenue, outpace the growth you would achieve without it?
Let’s look at some pros and cons:
Advantages Of Revenue-Based Financing
You don’t have to give up equity in your business.
Payments are a proportion of your revenue, so they increase or shrink with your business.
You’ll have a longer repayment term than you’d be able to easily find on the alternative market.
You may be able to access higher borrowing amounts than you would be able to with most loans.
Your credit rating and time in business aren’t as big factors as they would be with many other forms of financing.
Disadvantages Of Revenue-Based Financing
Only certain types of businesses are eligible for this model.
It’s not cheap. You can easily end up paying back twice as much as you borrowed, or more.
You won’t be able to raise as much money as you potentially could with venture capital.
You need to have revenue.
It’s not well-regulated.
What You Need To Qualify
Besides being in an industry supported by this kind of financing (namely tech), you’ll need to meet a few other qualifications.
You don’t need to be profitable, but you do need to be generating revenue with gross margins of 50% or more. Your gross margin is equal to your revenue minus the cost of the goods you sold. Take that number and divide it by your revenue. If it’s 0.5 or higher, you may be a candidate.
But not so fast! You’ll also need to demonstrate that you’ve hit a revenue threshold for three or so consecutive months. That number may differ from investor to investor, but it’s usually somewhere around $15,000. You also don’t want to be servicing any debt, so make sure you’ve settled any loans before seeking revenue-based financing.
And last, but certainly not least, you’ll need to find an investor or investment group that offers revenue-based financing.
Where You Can Find Revenue-Based Financing
Using equity financing as a model, you may expect it to be really difficult to find investors dealing in revenue-based financing. While it’s a relatively new model for financing with a limited number of players, there are a surprisingly large number of revenue-based financing investment groups that prominently advertise their services online. This includes entities like Alternative Capital, Decathlon Capital, and Lighter Capital. The ones with a strong web presence may even allow you to apply online. As a general rule, we recommend dealing with lenders and investors who are transparent and disclose the terms of their services upfront.
Learn About Other Financing For Businesses
With revenue-financing being an option only for a small minority of businesses, most of you will probably want some idea of the alternatives available to you if you don’t qualify. Luckily, you haven’t even come close to exhausting the possibilities.
Check out our other features for entrepreneurs:
How to Get A Small Business Loan: The Step-By-Step Guide
6 Financing Options for Up & Coming Entrepreneurs (Plus 4 Expert Tips To Get You Started)
14 Types of Alternative Financing for Small Businesses
What is a Merchant Cash Advance?
The post Revenue-Based Financing: What It Is & When It’s The Right Choice For Your Business appeared first on Merchant Maverick.
When talking about online payments, PayPal is probably one of the first payment platforms to come to mind. Most of us already have a PayPal account — whether it’s to fund that auction purchase on eBay or to send money to friends and family around the world. But as a small business owner, there is so much more that PayPal offers, including invoicing.
If you’re a small business owner that’s looking for an easy and affordable invoicing solution, you’re in the right place. PayPal invoicing allows you to easily customize and send invoices, as well as receive payments from your customers. If you’re not yet in need of full accounting software for invoicing and payments, this option from PayPal may just offer exactly what you’re looking for.
In this post, we’re going to introduce you to PayPal invoicing. By the end of this article, you’ll know what PayPal invoicing is, how much it costs, and whether or not it’s the right option for your business. If you’re ready to send your first invoice, we’ll also be breaking down how to customize your invoices and send them to customers so you can get paid more efficiently.
Keep reading to learn more about this PayPal service.
What Is PayPal Invoicing?
PayPal invoicing allows you to create professional invoices in just minutes. There are no software downloads required, and you can create and send your invoices from your computer or mobile device. You can customize your invoices by adding a logo, custom fields, and contact information. The process is quick and easy and is a great way to invoice clients and customers without paying hefty software subscription fees or fumbling with a clunky, hard-to-use UI.
How Do PayPal Invoices Work?
You can create printable invoices without even signing up for a PayPal account. However, to take full advantage of all of the features of PayPal invoicing, you’ll need to sign up for a free PayPal Business account.
Once you’ve created an invoice, you have three ways to get it to your customer. You can send the invoice directly through email. You can also create a link that can be shared with the customer. Once the customer receives the invoice, they can pay it instantly, giving you fast access to your funds. If you prefer to send your invoices another way (i.e., by the US postal service), your invoice can also be saved as a PDF and printed.
Customers can pay their PayPal invoices using a credit card, debit card, or PayPal account. Eligible users can also pay using PayPal Credit, which allows you to get your funds immediately but gives your customers up to six months to pay off any purchase of $99 or more. A PayPal account is not required for your customers to submit payment with a credit or debit card.
PayPal invoicing also helps you keep track of your sent and paid invoices. You can track payments, view billing history, and even send payment reminders for unpaid invoices. Other features include recurring invoices, partial payments, and tips. You can also create a custom billing app with PayPal Invoicing APIs.
How Much Does PayPal Invoicing Cost?
To take advantage of every feature offered by PayPal invoicing, you have to sign up for a free PayPal Business account. Sending invoices is completely free — you do not have to pay a dime to send unlimited invoices to your customers and clients. There are no setup fees or monthly fees to use PayPal invoicing.
However, you will be required to pay a fee once the invoice is paid. The fee is 2.9% of the invoice, plus $0.30 per transaction for US-based transactions. For transactions outside of the US, the fee is 4.4% plus a fixed fee based on the currency.
Once your client pays the invoice, the fee will be deducted and the remainder will be added to your PayPal Business account. You can then keep the funds in your PayPal account and spend them using the PayPal Business Debit Card, you can initiate a standard transfer to a linked bank account for no additional cost, or you can initiate an instant transfer to a linked debit card or bank account for 1% of the amount transferred (maximum fee is $10).
How To Create & Send An Invoice With PayPal
Are you ready to send your first invoice? You can get started in no time at all with PayPal invoicing. Just follow these simple steps, and you’ll be on your way to getting paid.
Step 1: Sign Up For A PayPal Business Account
You can download and print paper invoices without signing up for a PayPal account by using PayPal’s invoice template generator. But to get access to all features, it’s best to take a few minutes to sign up for a PayPal Business account. It’s completely free and very easy.
First, visit the official PayPal website and click “Sign Up.” Then, you will be given the option to sign up for a Business or Personal account. For invoicing, you’ll want to sign up for a Business account.
Next, follow the prompts and input the required information. This includes the email address you use to log in, a password, your business contact, business name, business address, and phone number. You will also need to include your business type, description of products and services, and monthly sales.
To secure your account, you will also need to provide the last four digits of your social security number, your date of birth, and your home address. Note that a credit check is not performed, so your credit score will not be impacted by signing up for a PayPal Business account.
Once this information has been provided, you will then be taken to the PayPal Dashboard. From here, you can view your PayPal balance, link your checking accounts and cards, send money, request money, and perform other tasks. In this article, our focus is on creating and sending an invoice.
Step 2: Open The Invoice Dashboard
There are two ways to start creating invoices from the PayPal Dashboard. You can use the Invoicing Quick Link directly on the dashboard, or you can navigate to the “Pay & Get Paid” tab, then select Create & Manage Invoices.
Once you’re on the next screen, you can click the link to create an invoice if you want to jump in immediately. For the purposes of this tutorial, we’re going to set up customers, inventory, and other information first by clicking on the Settings option.
Step 3: Add Your Business Info
Under business info settings, you can add, edit, or remove your:
First & last name
Additional info (i.e., business hours)
You can apply these settings to a single invoice or to all invoices created in PayPal. In this section, you can also select your template. There are three invoice templates:
Quantity: This template allows you to input the item name, quantity, price, and tax. You can add an optional description.
Hours: This template includes the item name, quantity, price, and an optional description.
Amounts Only: This template features the item name and price only.
Later, you can customize these templates by adding or removing fields and changing currency.
Step 4: Add Inventory
Once you’ve saved your changes under the business information settings, navigate to the Items list. While you can also add items manually to each invoice, this is a more efficient way to create invoices, especially if you have a specific list of products or services at set prices.
Select Add a New Item. From here, you can add the item name, description, price, currency, and tax. Once you save the changes, the item will be added to your list and can be added to your invoices.
Step 5: Add Customers
Now, we want to go back into settings and add your customer information in the Address Book. This is particularly useful for recurring customers that frequently make purchases.
Under Settings, go into the Address Book. You can add information for each customer by clicking Add new contact. For this section, you can add an email address, business name, first and last name, phone number, shipping and billing addresses, and a memo to yourself, which won’t appear on your invoices.
Once you’ve added information for your customers, you can access the Address Book to make changes, delete old customers, or add new customers. Instead of typing in the customer information every time you create an invoice, you can now pull this information directly from the Address Book. You still also have the option to input a customer’s information directly into the invoice. You can also bypass adding all of this information and use just an email address to send your invoice.
Step 6: Create Your Invoice
Remember the invoice dashboard we navigated to earlier? We’re going to go back to that and create our first invoice.
Let’s look at each section and break down how to complete and send your invoice.
In this section, you can add a customer from your address book, input customer information, or enter the email address of the recipient.
If you would like to use a different template, you can choose from the three options directly in the invoice.
If you need to add a logo or make changes to your business information, it can be done here.
Add items from your item list, and the total amount will be automatically calculated for you. You also have the option to add new items not found on your item list.
Message To Customer
In this section, you can add an optional note to your customer. You can also add terms and conditions or a reference number if you choose.
In this section, you can add up to five attachments. You can also add an internal memo that will not be viewable by the recipient of the invoice.
Your invoices through PayPal invoicing are in numerical order beginning with number 0001. If you’ve used a previous invoicing program or have another system in place, the invoice number can be changed.
You can also edit the invoice date from the default (the date the invoice was created) and the payment terms. In this section, you can also add discounts and shipping charges.
In this section, you can allow a partial payment or allow the customer to add a tip. By default, these options are turned off but can easily be turned on by selecting the relevant checkbox.
Step 7: Preview Your Invoice
Once you’ve filled out all information on your invoice, you have the option to go ahead and send it to your customer. However, PayPal also allows you to preview the invoice so you can see how it will look to the customer. This is a great time to make sure the invoice looks the way you want it to and that all information you’ve added is accurate.
After you’ve reviewed your invoice, you have several options:
Save the invoice as a draft that can be viewed, completed, and sent at a later time.
Edit the invoice.
Get a shareable link to the invoice.
Download and print the invoice.
Send the invoice.
Step 8: Getting Paid & Additional Steps
Once you click “Send,” you’ll be taken back to your invoice dashboard. From here, you can view information at-a-glance, including the customer name, invoice number, invoice amount, due date, and status. There are several things you can do to your invoices directly from this dashboard.
Some of the actions you can take include: Sending a reminder, editing the invoice, recording payment (if a payment was made outside of PayPal), canceling the invoice, or archiving it.
Once your customer pays the invoice, payment will automatically be recorded and the funds transferred to your Paypal balance. Your list of invoices will be automatically updated accordingly to show that the invoice was paid.
Through the Invoicing dashboard, you can also set up recurring invoices for repeat customers.
Simply choose the Recurring Series option, open a new invoice, select the frequency of invoicing, and create your invoice as you normally would. Invoices will automatically be sent as scheduled until you cancel or update them.
Another option that may simplify processes within your business is the ability to create estimates. You can do this through the Paypal Invoices dashboard. You can even later convert the estimate to an invoice if your customer decides to move forward with the transaction.
Are PayPal Invoices Right For You?
Congratulations! If you made it this far, you now know just how easy it is to create invoices with PayPal. Once you’ve set up your system, you can easily invoice your customers in minutes and be on your way to getting paid.
Still on the fence as to whether PayPal invoicing is right for you? Consider using PayPal for invoicing if:
You operate an eCommerce business.
You don’t have an extensive amount of inventory to track.
You don’t want or need more complicated accounting software.
You don’t want to pay for invoicing upfront (only pay when you get paid).
You want an uncomplicated invoicing system to use on your laptop or on the go.
PayPal invoices aren’t for everyone. If, for example, you need a more advanced inventory system (as opposed to just an inventory list), you’ll want to look elsewhere for invoicing software. If you’re looking for more advanced features and customization options, you might want to look into other software. Unsure of where to start? Check out our top picks in invoicing software, or start your search with a reputable product like Square Invoices. Remember to take advantage of free trials and no-cost plans to fully explore each option before making the choice for your business. Good luck!
The post Getting Paid With PayPal: How To Create & Send PayPal Invoices appeared first on Merchant Maverick.
Payroll software can cut down on errors and reduce time spent calculating paychecks, handling tax withholdings, and getting employees paid on time. But with so many options, it can be challenging and time-consuming to find software that best fits the needs and budget of your small business.
To help take out the guesswork and narrow down your search, we will compare two leading payroll software apps available to small businesses: Gusto and Run by ADP. For each, we will evaluate several criteria, including features, pricing, user-friendliness, customer support, and candid feedback from small businesses.
Read on for our side-by-side comparison and decide which software is best suited to your business.
Gusto VS ADP Overview
There is no one-size-fits-all solution to payroll. In assessing Gusto vs. ADP, we aim to highlight how and when businesses might benefit from each software. Notably, there are some key differences in features and pricing to be aware of when comparing Gusto vs. ADP.
Before diving into the details of how Gusto vs. ADP stack up head-to-head, letâs begin with an overview of each, including pros and cons.
Formerly known as ZenPayroll, Gusto has been in the payroll software industry since 2012. The cloud-based payroll platform has a reputation for its straightforward interface and the ease with which it automatically calculates payroll and tax filings. Gusto supports flexible payment schedules too, which comes in handy whether following a standard bi-weekly plan or periodically doling out bonuses and commissions.
Gusto is effective at integrating other aspects of business too, such as HR, employee onboarding, and benefits administration. Through the employee portal, workers can log hours and keep track of PTO with any of Gustoâs three plans. Additionally, Gusto can sync up with third-party applications, such as the popular accounting program QuickBooks.
Gusto has the essential nuts and bolts of payroll covered, but its provision of extra features isnât extensive across any of its three plans: Core, Complete, and Concierge. Conversely, this actually makes Gusto a budget-friendly option, even with some extra add-ons like health insurance and 401(k) plan support. Between pricing and features, Gusto is a fit for many small and midsize businesses looking for a practical platform to take care of payroll.
Transparent pricing for tiered plans
Integrated time tracking and HR
Intuitive user interface
Prepares year-end tax forms
Unlimited payroll runs (for businesses with <100 employees)
Limited time tracking
Less reporting than ADP
Health insurance offered in only 38 states and D.C.
Automatic Data Processing, Inc. (ADP for short), is a leader in workplace management for companies around the world. ADP has been helping businesses run payroll since the 1940s (beginning with an ice cream parlor before acquiring 12% of the payroll market today). The global firm helps deliver payroll and HR solutions to small businesses and major corporations alike.
For that reason, ADP offers multiple plans catering to diverse business needs. ADP Run, which is structured for companies with 1-49 employees, is the most suitable ADP package for small businesses. ADP Run has four tiers: the Essential Plan, the Enhanced Plan, the Complete Plan, and the HR Pro Plan.
Across all four plans, ADP Run handles core payroll functions, including payroll processing, direct deposit, tax filing, and new hire reporting. Each plan also comes with useful HR applications, namely PTO tracking and approvals, time tracking, and assistance with workers’ compensation, retirement, and health care. An employee portal (My ADP) connects workers with these HR functions, while also giving access to their pay stub and tax information.
As a major global firm, ADP has made a name for itself on customer support on top of its cutting-edge technology. Though reviews tout how intuitive the platform is, ADP staff are on hand 24/7 for phone and live chat support. Customer service also includes user tutorials and getting started with the software.
A total of four plans helps with customization
Strong payroll and employee management features
Payroll and HR reports can be exported to Microsoft Excel
24/7 customer service compared to Gustoâs Monday-Friday coverage
Pricing is not disclosed online
Additional features come with added fees
Charges per payroll run, whereas Gusto offers unlimited
Both Gusto and ADP possess an array of features to take care of payroll, as well as employee and HR management. They also pack many of the same features, including full-service payroll, tax filing, direct deposit, time tracking, new hire reporting, generating reports, and employee management. There are two distinctions in features that stand out. First, ADP offers health insurance in every state, whereas Gustoâs coverage is limited to 38 states and D.C.. Second, Gusto supports free unlimited pay runs, while ADP charges extra for frequency of payment.Â
Unlimited Pay Runs
New Hire Reporting
Although both software programs tout many of the same features, some tools and components differ considerably in scope and practice. To help make sense of it all, weâll compare Gusto vs. ADP on a number of important payroll features for small businesses.
Getting payroll taken care of in less time and without errors are major reasons why small businesses utilize payroll software. Therefore, itâs worth examining how Gusto and ADP help achieve these ends.Â
Across all their plans, Gusto and ADP offer full-service payroll for W2 and 1099 employees in all 50 states. For small businesses with tipped workers, Gusto can automatically adjust wages to claim the tip credit and abide by FLSA minimum wage requirements. Gusto can also handle garnishments and multiple pay rates and schedules, which can come in handy if employees earn commission or bounce between multiple roles (host and server at a restaurant, for example). ADP Run only offers garnishment for its three heftier plans (Enhanced, Complete, HR Pro).
Small businesses can choose to automate payroll with either software. ADPâs payroll services are accessible from its mobile app too.Â
Both Gusto and ADP Run allow small businesses to use direct deposit and cash cards to pay their employees across all plans. With Gusto, the Core, Complete, and Concierge plans allow users to run payroll just two days before employees need to be paid. The most notable difference in payment methods between the two is that Gusto supports in-house printing of paychecks, whereas ADP Run can only mail checks through the Enhanced, Complete, and HR Pro plans.Â
On paper, both Gusto and ADP deliver payroll reports with any plan. However, ADP reporting features go incredibly in-depth. ADP Run users can access dozens of reports related to payroll, taxes, benefits, and HR. Some examples include employee time card comparisons, earnings by department, tax withholdings, and PTO per employee. On the flipside, Gusto supports just 11 reports. Although it is considerably less extensive, users can still view and export reports related to payroll summary, taxes, benefits, and employees too.Â
In addition to paying employees and calculating tax withholdings, payroll software can bring HR support to small businesses too. Only Gustoâs priciest Concierge plan comes with HR compliance help, policy guides, and templates. Meanwhile, ADP Run has HR features available with all four plans. The essential plan gives access to an HR newsletter and checkups. Upgrading to more advanced plans can bring additional HR perks, including poster compliance assistance, background checks, ZipRecruiter subscription, legal assistance, and employee training.Â
Gustoâs straightforward pricing lets small businesses make easy cost comparisons and determine how a prospective plan would fit within their budget. The monthly cost per plan is characterized by a base rate plus a flat fee added for every person in a customerâs payroll.
Basic: $19/month + $6/month per person (employee or subcontractor)
Core: $39/month + $6/month per person
Complete: $39/month + $12/month per person
Concierge: $149/month + $12/month per person
There are extra costs for adding on benefits administration services and other features to complement Gustoâs payroll software. For instance, customers can tack on health benefits, 401k retirement plans, workersâ compensation insurance, 529 college savings plan, and tax-advantaged spending accounts
As previously mentioned, ADP does not have set pricing for each of its plans. Instead, interested customers receive a quote based on their business, desired features, and number of employees. On ADPâs website, getting pricing for any of the ADP Run plans requires entering your businessâs name, zip code, number of employees, and a contact email.Â
Research by the team at Merchant Maverick reports that there is generally a $20-$50 per month increase in pricing between each tier of ADP Run. Although pricing does not give ADP a competitive edge, an offer for three free months of ADP Run upon sign-up could lower the cost barrier to give it a test run.Â
Ease Of Use
Finding payroll software that fits your budget and needs is an important first step to narrowing down your options. Being able to quickly learn how to navigate the platformâs interface is another critical factor in selecting payroll software.
Gusto and ADP are both well-organized and intuitive on the user end. For Gusto, the employer and employee portals have dashboards containing the main payroll information, while sidebars provide quick access to its features. On the other hand, business owners can easily find ADPâs payroll and HR features from the home page or employer portal dashboard.
In the case of ADP, customers may work with a company representative to work through the payroll set-up process. This support also comes with tutorials to guide customers through utilizing ADP Runâs various features. Meanwhile, Gusto users will need to take a more DIY approach to setting up payroll. Step-by-step instructions and customer support can take most of the guesswork out of it. Once the payroll information has been inputted, Gustoâs AutoPilot can take care of payroll moving forward or employers can manually run payroll as they see fit.
Employees can access payroll and HR resources and information with either software. After logging into Gustoâs employee portal, workers can look into pay stubs, time off, benefits, and upcoming payday with just a few clicks. ADPâs portal and mobile app â MyADP â help employees get to their pay stub, tax information, and HR features, such as making PTO requests or updating personal information.
Customer Service & Support
Gustoâs quality customer support is one of its main selling points. Once youâre a Gusto customer, you can reach support staff by phone, email, live chat, and social media during business hours from Monday through Friday. If youâre in need of assistance outside these hours, youâre still in luck. Gustoâs Help Center, Resource Center, and Ask Gusto how-to articles are loaded with useful tips and information. Although all four Gusto plans have access to customer support, the Concierge plan delivers the extra perk of a dedicated customer service team to help with HR and compliance.
Over the past six decades, ADP has built its reputation on attentive and quality customer service and support. ADP customers can reach a company representative 24/7 by phone and live chat. Community forums, email, and social media are other options for advice and help too. Visual learners will appreciate the fact that ADP has its own YouTube channel with tutorials and resources to help customers make the most of their payroll processing and HR management features.
Reviews & Complaints
Small business owners undoubtedly know their needs better than anyone else, but tapping into the knowledge and experiences of other small businesses can be informative when it comes to payroll software.
When it comes to Gusto, most small business customers are pleased with the softwareâs features (especially tax support, reminders when itâs time to submit payroll, and customer service. Generally speaking, reviews have also praised the softwareâs intuitive nature, transparent pricing, and its ability to save business owners time and energy. On the flip side, some customers have complained about limited reporting and analytics. In some cases, customers have expressed the wish that Gusto covered international employees and contractors too.
As a veteran provider, ADP Run has worked out many bugs and internalized customer feedback over the years. This experience has been praised in some customer reviews. Users also appreciate the round-the-clock support, multitude of features, and easy-to-use interface. Conversely, customer complaints have touched on hidden fees and undisclosed pricing for its various plans. Some customers have voiced frustration with having to request a demo from a sales representative to get a sense of the softwareâs interface.
There are many aspects to running a small business beyond payroll and HR, including accounting, project management, recruiting employees, and sales. Some small businesses may even utilize other software or applications for these needs. Gusto and ADP both recognize this reality and have chosen to offer a host of integrations.
Both Gusto and ADP offer plentiful integrations, including accounting programs, QuickBooks, and Xero. ADP also supports dozens of time and attendance software, including ClockShark, Deputy, Homebase, and TSheets. Although the company doesn’t disclose every available integration on their website, ADP is known for working to customize integrations when needed.
If small businesses donât find Gustoâs time tracking features up to par, they can also integrate with a more robust app time tracking app like TSheets. If you have in-house developers, Gusto offers API to support any further integration needs.
The Key Differences Between Gusto & ADP
Between features, pricing, ease of use, customer support, reviews and complaints, and integrations, there is a lot to consider when choosing between Gusto and ADP. If youâre still undecided, letâs examine how these payroll software applications differ through the lens of a small business:
Pricing Structure: Gustoâs pricing is upfront and transparent. The cost will incrementally go up with the number of employees, and some optional add-on features can be included for a fee. On the contrary, ADP does not advertise pricing for any of its plans. Interested customers must obtain a quote and negotiate a deal, which could put smaller employers at a disadvantage.
Payroll Scheduling: Gusto grants the flexibility to pay employees on multiple pay schedules without charging extra. ADP charges per payroll, so paying employees on a weekly basis or processing contractor invoices would rack up extra expenses.
Reporting: Gustoâs 11 reports can inform users on some payroll basics, but ADP offers a wider and more in-depth selection of reports for small businesses. ADP lets users analyze employee data, including overtime and performance, as well as create custom reports.
HR Support: Only Gustoâs Concierge plan includes HR features. ADP Run has significant HR capabilities, such as an HR toolkit and dedicated HR advisers, in its more robust Complete and HR Pro plans. These resources could be advantageous for small businesses without a dedicated HR person.
Which Is Best For My Business Needs: ADP Or Gusto?
There isnât a single model for success when it comes to processing payroll. Many small businesses are satisfied with how ADP and Gusto have enhanced their operations. Letâs consider some scenarios when each software could be a better solution for small business needs.
Choose Gusto If…
You run a small or startup businesses
You value streamlined payroll, HR, and benefits management over sophisticated analytics and reporting.
You need flexible payroll runs for contractors, tipped workers, or employees earning bonuses or commission.
Choose ADP Ifâ¦
You have a mid-size or rapidly expanding businesses.
You want to integrate payroll with other apps and software.
You require more extensive HR features to recruit applicants and perform background checks.
Gusto VS ADP Comparison: The Final Verdict
Gustoâs success in the payroll realm can be attributed to its transparent, budget-friendly pricing structure and easy-to-manage interface. The softwareâs leading features â automated payroll processing, direct deposits, tax filing, and PTO management â are available across all four plans. Benefit options, such as medical, vision, dental, 401(k), and tax-advantaged savings accounts are affordable add-on features if desired. For these reasons, small and startup businesses stand to benefit from the straightforward features, pricing, and integration with other software and applications.
Across all four plans, ADP Run is more comprehensive in its features and customization. Beyond its full-service payroll processing, ADPâs most prominent features are its extensive reporting and analytics, HR support, and time tracking. Additionally, 24/7 customer service can give small businesses peace of mind, especially if working outside standard 9-5 business hours. Since ADP doesnât disclose pricing, the time demand and uncertainty of negotiating a price (plus hidden fees) may not be right for smaller businesses. Instead, mid-size businesses with greater HR needs and plans to grow may better afford and appreciate ADP Runâs added features
The post Gusto VS ADP: Which Payroll Software Is Better? appeared first on Merchant Maverick.
We can all agree that 2020 has been quite a year. Many of us are ready to put it behind us and are looking forward to the year ahead. Intuit has gotten a jump on the new year with the release of QuickBooks Desktop 2021, the latest version of its best-selling accounting software.
But before you jump headfirst into an upgrade, take a few minutes to understand what’s new about QuickBooks Desktop 2021. In this post, we’ll explore the new features and new pricing to help you determine if this latest version is right for your business.
What’s New With QuickBooks Desktop 2021?
QuickBooks 2021 has introduced a handful of new features that make it easier for small businesses to balance their books. These features include improvements to bank feeds, automated statements, categorized receipt entries, and receipt customization.
QuickBooks 2021 Features
Let’s take a look at each of the new features offered by QuickBooks Desktop 2021 so you can see how these changes affect your business.
Bank Feed Improvements
Receipt Management Tools
Of course, you’ll also still have access to the same great features offered in the previous version of QuickBooks Desktop, including cash or accrual-based accounting, expense tracking, invoicing, estimates and quotes, contact management, inventory, and more.
If you’re a Mac user, QuickBooks for Mac offers a number of new features in its latest software. These features include:
Automated Payment Reminders
Statement e-Payments: Add a payment portal link directly within your statements, making it easier and more convenient for you and your customers.
Combined Invoices: Combine multiple invoices into one simple email.
Sales Tax Codes: Now you can record sales tax for out-of-state orders, non-profits, and multiple districts.
1099 e-Filing: You can now e-file 1099s through QuickBooks for Mac.
QuickBooks Desktop 2021 Pricing Changes
QuickBooks Desktop 2021 also brings increased pricing. There are several different pricing options available to you. Let’s break down the costs of each option to help you determine which is right for you.
$299.95 one-time license
$399.99 one-time license
$499.95 one-time license
$649.99 one-time license
Starting at $924/year
$399.99 one-time license
$399.99 one-time license
QuickBooks Pro 2021
Your first option is to purchase an annual subscription. QuickBooks Pro Plus 2021 is priced at $299.99/year, although you may qualify for discounts when purchasing directly through Intuit. With this subscription plan, you’ll have full access to QuickBooks Desktop, as well as unlimited customer support, automatic backup and recovery, and automatic updates and patches. You also have the option to add on payroll and hosting services. Additional users can also be added for a fee.
You may also opt to purchase a QuickBooks Pro 2021 license for a one-time fee of $399.99. While this may seem like the less expensive option, there are a few things to consider. Automatic updates, data recovery, and backups are not included. You will also pay an additional $299.95/year for a Care Plan that offers unlimited support. These are all included for no additional fee when you subscribe to QuickBooks Pro Plus 2021. Payroll, hosting services, and additional users can be added for an additional fee.
QuickBooks Pro Plus 2021 + Payroll
If you have employees and plan to use QuickBooks for payroll, QuickBooks Pro Plus 2021 + Payroll has what you’re looking for. This plan costs $749.99/year. It includes everything from the QuickBooks Pro Plus 2021 subscription, as well as QuickBooks Enhanced Payroll. Hosting services and additional users can be added for a fee.
QuickBooks Premier 2021
If you want everything offered by QuickBooks Pro but want industry-specific software, QuickBooks Premier 2021 is a good choice. QuickBooks Premier 2021 can be purchased for a one-time fee of $649.99. Payroll and the QuickBooks Care Plan can be added on for an additional cost.
If you prefer an annual subscription that includes unlimited customer support, updates, and automatic data backups, you can sign up for Premier Plus 2021 at a cost of $499.99/year.
QuickBooks Premier Plus 2021 + Payroll
You can sign on for Premier Plus 2021 with the addition of Enhanced Payroll for a cost of $949.99/year.
QuickBooks Enterprise 21.0
Businesses looking for a more scalable solution may want to give QuickBooks Enterprise 21.0 a try. With this plan, you can have up to 40 users and get access to additional features including advanced inventory, priority support, and industry-specific software versions. QuickBooks Enterprise costs $1,213/year.
QuickBooks For Mac 2021
There are no complicated pricing tiers for QuickBooks for Mac. This software is available for a one-time cost of $399.99.
QuickBooks Desktop 2020 VS QuickBooks Desktop 2021
QuickBooks Desktop 2020
QuickBooks Desktop 2021
Live Bank Feeds
Custom Payment Receipts
Intuit has always added new features to further simplify its accounting software and the release of QuickBooks Desktop 2021 is no exception.
One of the biggest additions is automated statements. This feature lets you automatically send scheduled statements or payment reminders to your customers. With automated reminders, you can get paid faster without having to manually set up statements.
Another feature added to automate processes is improved receipt management. Users can be given access to upload expense receipts from a computer or mobile device, making it quick and easy to track expenses. You can also automatically categorize and record multiple transactions at the same time, helping cut down on the time spent importing receipt data.
QuickBooks Desktop 2021 now offers customer groups. With this feature, you can group customers based on set criteria such as location, customer status, or customer type. Once your groups are created, you can send automated statements, payment reminders, or create custom mailing lists.
QuickBooks Desktop 2021 also brings improvements to bank feeds, making it faster than ever to review, add, or match bank transactions. The latest improvements to bank feeds save time by automatically categorizing bank transactions by accounts, payees, and classes. You can take advantage of batch editing and enhanced rules to cut down on data entry, while also making it easier and faster to find and resolve discrepancies.
Finally, the latest version of the software allows you to customize your payment receipts with a logo or custom fields to give your receipts a more polished and professional look.
Should You Upgrade To QuickBooks 2021?
The first factor you should consider before upgrading to QuickBooks 2021 is what version your business is currently using. If you’re using QuickBooks 2018 or an earlier version, support for your software may have already expired (or is set to expire soon). While you can still use your software, you lose technical support, as well as important features like security updates and access to QuickBooks Payroll. So, if it’s been a while since you’ve updated your software, it may be a good idea to upgrade to the latest version.
On the other hand, if you’re using a more recent version of QuickBooks Desktop, an upgrade may not be necessary. While there are a handful of new features, these features may not be worth the increased pricing that comes with upgrading to QuickBooks 2021.
If you’re an annual subscriber, you’ll automatically be updated to the latest version and will be able to use all of the new features. But if you made a one-time purchase, you will need to evaluate if the new features will be beneficial for your business and worth the additional cost of upgrading to QuickBooks Desktop 2021.
The post QuickBooks Desktop 2021: Everything You Need To Know About Intuit’s Latest Release appeared first on Merchant Maverick.
Welcome to the first week of Merchant Maverickâs essential news briefing for small business owners.
An appointment-making robot and Amazon Prime Day records dominated the small business news cycle over the past seven days. Read on for this weekâs top five must-know stories for small business owners.
Google’s AI Assistant Has Begun Booking Appointments For Users
Google recently began rolling out the booking feature of its AI chat assistant Duplex, per a report by VentureBeat. Duplex’s booking abilities enables users to request appointments at a business using the Google Assistant, Search, or Maps apps on their phone. Duplex will then call the business and reserve an appointment on the user’s behalf using “natural language processing.” In all cases, Duplex informs the person on the other end of the call that it is an automated service.
Originally teased by Google in 2018, Duplex’s recent launch supports barbershop, hairstylist, and salon appointments, but the AI bot has also had a limited capability to make restaurant reservations over the phone since at least 2019.
Besides the rollout of Duplex’s booking feature, Google also shared a number of tidbits relevant to small businesses during its Search On conference this week. The company says Duplex has updated 3 million business listings across eight countries since the start of the pandemic. Google also announced that starting in the first half of 2021, everyone can migrate for free from Hangouts to its new communication service Chat — a potential Slack competitor.
Why this matters to you: Duplex’s booking feature could help increase the reach of small businesses that rely on phone calls to book services. Because not everyone likes talking over the phone, potential customers who might balk at calling to set up an appointment may feel more comfortable booking one through Duplex.
Further reading: One year later, restaurants are still confused by Google Duplex, The Verge
Amazon Prime Day Set A Record For Small & Medium Businesses
This year’s Amazon Prime Day, which ran October 13-14, saw third-party sellers rack up $3.5 billion in sales — a 60% increase over last year. While failing to disclose total Prime Day sales, Amazon claims that third-party sales grew more than Amazon’s own retail businesses. Amazon added that “most” of its third-party sellers are small-to-medium-sized businesses, with small businesses in Utah, California, and New Jersey nabbing the biggest sales per capita.
Despite smashing sales records, Amazon faces scrutiny. The company was recently named in a Congressional anti-competition report that looked into how Amazon’s rules may have put smaller sellers at a disadvantage. The site has also struggled to shake the notion that it frequently peddles counterfeit products, an issue that came to a head last year after a Wall Street Journal investigation.
Why this matters to you: As small businesses look for digital revenue streams in the world of COVID, selling on Amazon could be a great way to dip into the eCommerce space — and Prime Day’s record sales numbers provide an early indication that shoppers are keen to buy online this holiday season.
For more on how your small business can make money on Amazon, check out Merchant Maverick’s guide to starting an Amazon store.
PPP Lenders Allegedly Told To Favor Existing Customers
The government’s much-ridiculed Paycheck Protection Program (PPP) for small businesses has yet another blotch on its record: A Democratic-led House congressional oversight subcommittee found that the US Treasury Department privately encouraged lenders to prioritize existing customers when issuing PPP loans. The initial instructions for lenders to “go to their existing customer base” allegedly came from the Treasury on March 27, the same day the PPP legislation was penned into law.
The House report did note that the Treasury denied such claims. However, the report cited several high-up industry leaders, including the president of the American Bankers Association and a “senior banker” at JPMorgan Chase & Co., as saying that the Treasury wanted banks to work with existing clients. A spokeswoman for JPMorgan said that the bank “initially focused on existing customers” because of the “time-consuming regulatory requirements to onboard a new client.”
Why this matters to you: Because lenders may have favored existing customers, underserved small businesses (which include those owned by minorities and women) were potentially put at a disadvantage when applying for PPP funds. These latest insights reinforce earlier reports that banks favored larger companies — even though rules issued by the Trump administration said the PPP was to be “first-come, first served.”
Comcast RISE Launched To Help Diverse Small Business Beat COVID
In an effort to help small businesses survive the recession generated by COVID, media and telecommunications conglomerate Comcast launched Comcast RISE. This new support program will help out small businesses via $10,000 grants, marketing resources, and tech equipment.
Black-owned small businesses are eligible to apply for Comcast RISE’s initial wave right now. The program will open up applications to BIPOC (Black, Indigenous, and People of Color)-owned small businesses starting November 28. The grant part of Comcast RISE also hasn’t started yet, either — that will launch November 28, too.
Why this matters to you: COVID has ravaged much of the US economy, with small businesses taking the brunt of the damage. With financial support from the government looking slim, small businesses will need to turn to alternative methods to help push through a downturn in revenue. Through its various tools, Comcast RISE will hopefully be able to keep numerous small businesses up-and-running through 2021.
A New Service Can Help Track Competitors’ Google Maps Ratings
Ratings on Google Maps have long been a great way to gauge the public’s perception of a business. However, it’s difficult to monitor a business’ rating over time — and even more difficult to gauge multiple competitors’ ratings over time. Enter Local Monitor, a recently-launched service from Paris-based startup WizVille.
WizVille’s Local Monitor works simply: You enter your business’ name on the site and get a display of nearby places that provide similar products or services to you. You can then choose up five competitors to track and WizVille will email you a monthly report detailing your business and its competitor’s Google Maps ratings over time. Read more about Local Monitor on TechCrunch.
Why this matters to you: Being able to track Google Maps ratings can help you understand how customers view your business and its competitors. This extra bit of data could give you a leg up over other local businesses within your niche.
The Latest From Merchant Maverick
Our latest small business spotlight looks at a Texas-based startup called Everyware, a payment gateway that offers text message-based billing solutions for an array of industries. By building its product around text messages, Everyware aims to eliminate the clutter that persists throughout daily life. Take a peek to learn more about Everyware:
Everyware Uses Text-Based Billing To Help More Businesses Profit From Contactless Payment During COVID
It’s a bleak, bleak world out there, so let’s finish your briefing on a positive note.
In Tampa, Florida, two teenage boys raised $30,000 over the course of six months to help small businesses struggling because of COVID. Gifts of $10,000 will go out to three businesses local to Tampa.
“We could never have expected to raise this much money,” said Robbie Herzig, one of the enterprising teens that kick-started the operation. “We were just looking to help any way that we could and when it took off.”
Do you have a story idea, tip, or press release for the Merchant Maverick news team? Shoot us an email: [email protected]
The post Google’s AI Can Now Make Appointments & 4 More Small Business News Stories You Need To Know appeared first on Merchant Maverick.
You’d never want to use the word “luck” in the context of something like a pandemic, but the adaptations businesses have made to comply with lockdowns and social distancing have made a powerful case for entrepreneur Larry Talley’s vision.
Talley is the founder & CEO of Austin, Texas-based Everyware, a payment gateway that seeks to address some common pain points in the payment/billing cycle. Talley’s solution is built on an optimistic premise: that many bills, transactions, and customer service inquiries that go unaddressed or unfulfilled aren’t being purposefully avoided. They’re simply getting lost in the shuffle. In other words, have you carefully gone through that pile of mail on your kitchen table? Do you regularly check your spam folder to make sure nothing important is landing there?
If you’re anything like me, probably not.
It Starts With A “Thank You”
Everyware gets around this by sending a text message receipt with every transaction.
âIt can be as simple as a thank you, but what it does is provide a basic communication channel that’s open all the time, 24 hours a day, seven days a week,” explains Talley. “You can always text back your concern or your problem. Or even a positive review.â
Talley, who is a software developer, bootstrapped Everyware and maintains it with a small team of around 25. The company now has customers not only in the US, but in Canada and Mexico thanks to word of mouth and ISO referrals.
âLike most bootstrapped companies, you start with a great idea, but bringing that idea to market is a lot harder than you think,” says Talley, “The idea really goes back to 2015, but it took until about 2017 to really pull it together.â
Saying “YES” To Text-Based Billing
The kind of text channel Everware helps to create can be used for more than just thanks or communication; it can also be used to initiate payments. This can be done through a link in the text or, if the payer has a credit card on file, simply approving the transaction with an affirmative text message like “YES.”
As a freestanding payment gateway, Everywear can be added to most existing merchant account services.
If you’ve interacted with the medical system in the past few years, or have donated to a political campaign, you probably have an idea of how this works. Many healthcare providers will, for example, send you texts reminding you of upcoming appointments. Afterward, they’ll send you a message alerting you that your bill is now available, usually with a link to their patient portal. Similarly, many political campaigns this cycle have utilized “textbanking” to connect with supporters, alert them about events, and solicit donations. As you might imagine, these have been two of Talley’s biggest sources of customers.
Talley expands on how useful text-based billing can be in the medical industry, “When you go to the hospital, you might have five different doctors and different bills for each. All when you’re going through a tough time in life.â It’s not uncommon for patients to get a bill from one doctor or department, think they’ve completely settled their medical payments, and miss the other bills. The hospital misses out on payments, and the patient starts getting calls from collection agencies. Everyware seeks to eliminate this problem by providing better communication with an easily accessed paper trail.
Thanks To COVID, Everyware Is…Everwhere
Everyware’s niche may turn out to be a lot bigger than politics and medicine when all is said and done. COVID-19 has created an enormous demand for contactless payments. While eCommerce transactions can and have been filling the gaps, they aren’t the only way to replace what would otherwise be over-the-phone card payments. A text-based transaction can not only be used to make many of those payments, but it can do so more securely. Think of it as something like two-factor authentication. Not only are you getting the card’s security features, but you’re also getting it via a phone number and device that have a record of belonging to a specific individual for an extended period of time. This creates less room for fraud than most card-not-present transactions. It also leaves a record of the transaction in a place where it can be easily seen and recovered.
“We’ve signed up a few private airports, so now pilots don’t have to get out of the plane to pay for gas. They can just pay from their phones,” says Talley. Talley sees government and municipalities as big growth sectors, particularly where the court system is concerned. While getting a traffic citation by text may not be a thrilling prospect for most people, Talley anticipates savings from reduced paperwork and fewer unpaid tickets.
There are plenty of other businesses that may find a use for text transactions in our new paradigm.
âWith curbside pick-up, pharmaceuticals, online schooling, everything moving toward a model that’s compatible with our platform, it has really accelerated our growth,” explains Talley. “We’re today, a company that’s cashflow positive and high-growth. We’re more or less a platform now rather than just a standalone payment gateway.â
The post Everyware Uses Text-Based Billing To Help More Businesses Profit From Contactless Payment During COVID appeared first on Merchant Maverick.
There are several key components that contribute to the success of your business — hardworking employees, identifying and marketing to your target audience, and providing high-quality goods and services. However, one of the most important components that contributes to the success of your business is bringing in and maintaining a healthy cash flow.
Let’s face it: Without capital flowing in and out of your business, your doors aren’t going to stay open for long. Maintaining a healthy cash flow will help your business stay afloat and make it profitable and successful.
In this post, we’re going to look at different ways to manage your cash flow. Now, this article won’t be centered on improving cash flow (you can read more about that here). Instead, we’re going at ways you can manage and maintain a healthy cash flow. In other words, we’re going to help you more strategically work with what you’ve got. Let’s jump in.
Cash Flow Basics
Before we break down ways to manage and maintain a healthy cash flow, it’s important to understand what cash flow is and what it means for your business.
Simply put, cash flow is the cash that comes in and goes out of your business. Cash flows in from things like sales, business loans, and returns on investments. Cash flows out to cover expenses like operating costs, inventory, supplies, and payroll.
Cash flow can be positive or negative. This means:
Positive Cash Flow: The amount of cash that is coming into your business is more than the amount of cash going out of your business.
Example: This month, your business brings in $20,000 through sales, investments, accounts receivable, and financing. Your total liabilities, expenses, accounts payable, and payroll total is $15,000. In this example, your cash flow is positive.
$20,000 – $15,000 = $5,000
Negative Cash Flow: The amount of cash that is coming into your business is less than the amount of cash going out of your business through things like payroll, expenses, and accounts payable.
Example: Last month, your business earned $10,000 through sales, investments, accounts receivable, and financing. Your total liabilities, expenses, accounts payable, and payroll are $12,000. In this example, your cash flow is negative.
$10,000 – $12,000 = -$2,000
If your cash flow is positive? Great! That’s exactly what you want to see. But don’t sit back and think you’re completely in the clear. Your cash flow can be impacted positively or negatively from month-to-month — or even day-to-day! This is why it’s so important to always keep an eye on the numbers and take steps (like those we’re about to dive into) to manage and maintain a healthy cash flow.
What Is Cash Flow Management?
Cash flow management means tracking the cash that is coming into and out of your business. Utilizing cash flow management within your business helps identify where money is coming from and how much is coming in. It also helps you identify the outflow of money and where it’s going.
Not only does this give you an idea of how much cash you have on-hand at this moment but it can give you insight into your cash flow in the future. By tracking your company’s cash flow, you can spot trends, changes, and potential problems that can be corrected sooner rather than later.
How To Manage Cash Flow
Managing your cash flow — tracking cash that flows in and out of your business — is imperative to the success of your business. The good news is that there are a variety of tips and tools at your disposal that make it easy to manage your cash flow.
Open A Business Bank Account
A common mistake that many new business owners make is mixing their business and personal finances. This can get complicated over time, making it confusing to track business income and expenses, and can be a nightmare come tax time. Keep your business and personal finances separate by opening a business bank account.
Your business bank account can be used for your incoming payments and to pay your business expenses. You can link this account to your accounting software (more on that later) to easily track your cash flow. As a bonus, most lenders require a business bank account if you seek financing, so it’s good to go ahead and get your account set up as soon as possible.
Build A Cash Reserve
Even if your cash flow is positive now, things can change in an instant. It’s best to be prepared for these potential setbacks with a cash reserve. Having a cash cushion at the ready can help you navigate unexpected financial challenges — seasonal slowdowns, an emergency expense, or a pile of unpaid invoices, for example.
A general rule of thumb is to keep at least three months’ worth of expenses as a buffer. This number may be adjusted up or down based on your specific cash flow situation and the needs of your business. While setting your own funds aside for this purpose is best, you may also choose to add a business credit card, revolving line of credit, or bank overdraft protection in the mix to further boost your reserves.
Keep Track Of Money Owed
Do you invoice your customers immediately, or do you tend to procrastinate? Once you’ve sent the invoices, do you stay on top of payments by sending out statements and reminders … or does this typically fall through the cracks?
Keeping up with money owed to you and actually collecting it is critical to maintaining a healthy cash flow. Sure, you may be working with a positive cash flow now, but what happens next month when those invoices remain unpaid? Accounting software makes it easier than ever to create professional invoices, send invoices to clients, collect payment, and even set up automated reminders or recurring invoices to repeat customers. Which leads us to…
Choose The Right Accounting Software
Accounting software is a must-have for any business. There’s a long list of reasons why you should be using accounting software, but one of the most important is that it allows you to track money that’s coming in and out of your business — often, in real-time, depending on your software’s capabilities. You can also send invoices, statements, estimates, and payment reminders. Additional features offered by your software may include inventory tracking, payroll, and other helpful tools to help you maintain and grow your business.
If you’re new to accounting software, take a look at our software reviews and our top picks, and give a few programs a try. Some are free to get started, while others offer free trials. If you already use accounting software, evaluate its features to determine if it’s offering everything you need to manage your cash flow.
Stay On Top Of Your Accounting
Finding the right software for your business is only the first step. To efficiently and effectively manage cash flow, it is up to you to monitor and maintain accurate accounting records.
Sure, your software will automate a lot of processes that you don’t have to perform manually (for example, automatically updating transactions through live bank feeds). This doesn’t mean that you can set it and forget it. Make a habit of looking over your transactions, checking in on unpaid invoices, and performing other tasks to ensure your cash flow is stable.
Another way to track your cash flow both now — and in the future — is with reports. Remember that accounting software we talked about? Most programs can (at the very least) pull basic financial reports, giving you an overview of your current cash flow situation. You may even have access to advanced reporting that allows you to look at future cash flow projections based on current and previous trends. You can use these reports to determine where you’re falling short (i.e., unpaid invoices or an expense that can be cut) and make changes to maintain your cash flow.
Know Your Risks & Be Prepared
Running your own business can be, well, risky business. A number of challenges can affect your cash flow — from a slow-down in customers to a more widespread crisis. In the 2000s alone, we’ve already faced the Great Recession of 2008 and the COVID-19 pandemic of 2020 — and no one knows what the future holds. However, you can assess risk and be prepared for these situations.
Since every business is different, the risks and challenges you face will be unique to your business. Think of possible scenarios that may have a significant impact on your business (and your cash flow). Use your accounting software or reports to look over the numbers and experiment with different scenarios. For example, what would happen if you lost one of your biggest clients? What would happen if you were forced to shut your doors for a week … or longer? Knowing the numbers and running through various scenarios can help you determine factors like how much money you need to bring in to continue to operate, where you could cut expenses if absolutely necessary, and could help you plan for the future — no matter what it may hold.
Getting A Handle On Your Business’s Cash Flow Management
Managing your cash flow doesn’t have to be difficult, especially when you’re willing to put in a little time to track the numbers, analyze your cash flow, and use software and tools that are at your disposal. Looking to improve your cash flow? Check out our post on 10 Strategies To Improve Cash Flow. Want to boost your cash flow? Take a look at our article The Best Cash Flow Loans For Small Businesses In 2020.
For now, though, focus on strategizing, planning, and tracking your cash flow to keep your business more secure now and in the future. Good luck!
The post How To Maintain A Healthy Cash Flow For Your Business appeared first on Merchant Maverick.
Small business owners in California who run their own payroll are responsible for paying the right payroll taxes — and paying them on-time. To avoid legal penalties and serious consequences, it’s vital to know what payroll rules businesses in California need to follow.
These laws can get complicated, since California has a unique blend of state-level taxes in addition to federal and local ones. Letâs break down the payroll taxes you need to report and contribute when hiring employees in the state of California.
California Payroll Laws & Regulations
California requires multiple payroll tax contributions from both business owners and their employees. The different rates at which you and your employees contribute typically changes on an annual basis, and are broken down based on things like your employeeâs wages and how long your company has been in business.
Letâs cover how Californiaâs payroll laws and regulations affect your business and your employees at the federal, state, and local levels.
California Payroll Taxes
The Employment Development Department, or EDD, oversees California’s four separate payroll taxes: Unemployment Insurance (UI), Employment Training Tax (ETT), State Disability Insurance Tax (SDI), and California Personal Income Tax (PIT), which weâll cover in more detail later on.
As a business owner, youâre responsible for withholding the appropriate amount of taxes from each of your employees’ paychecks (and your own wages). Under most circumstances, employees also need to contribute parts of their paycheck toward State Disability Insurance (SDI) and Personal Income Tax (PIT). Weâll cover these in more detail later on, since they need to be paid in addition to federal taxes.
Employers pay contributions toward Unemployment Insurance (UI) and Employment Training Tax (ETT). Certain industries grant exemptions to some of these four state-level payroll taxes, although youâre typically responsible for withholding the proper amounts for these state-level taxes as a business owner.
The following California-specific taxes need to be withheld in addition to federal taxes:
Income Taxes: California sets its personal income tax based on an individual’s income. The state doesn’t cap its limit for how much it can tax personal income, which your employees are responsible for paying themselves. California calculates the tax rate for personal income tax based on supplemental tax rates, but employees can also withhold personal income tax on their W-4 form or DE4 (Employee’s Withholding Allowance Certificate)
Property Tax: California’s Proposition 13, enacted in June of 1978, capped the rate against which the state could tax real property at one percent. What’s more, the law requires that local elections achieve a two-thirds majority in favor of increasing this one percent. Since its passage, Proposition 13 has remained virtually unchanged and still applies to all residential and commercial real property in the state of California.
Sales Tax: The Bradley-Burns Uniform Sales and Use Tax Law of 1956 created sales and use taxes that split between the state, the city, and the county. California’sÂ current rate for use and sales taxes is 7.25%, six percent of which goes toward the state of California, one percent toward the local city or county, and the remaining toward local transportation. California uses additional district tax rates of higher than 7.25% for certain parts of the state.
California’s Tax Exclusions & Exemptions
California State’s Board of Equalization works with county-wide assessors to exempt religious, hospital, scientific, and charitable properties, or any properties that can be reasonably determined as owned and operated for nonprofit purposes. The board is also responsible for exempting properties qualifying for Welfare or Veteran’s Organization Exemption tax withholdings. California relies on the Board of Equalization to work with county-wide assessors to decide on how best to administer additional property tax exemptions for the state.
California’s Minimum Wage
Just like other states, California has minimum wage laws that business owners need to follow when they record and report their payroll. For businesses that staff fewer than twenty-five employees, owners must pay a minimum wage of eleven dollars per hour. Any business that staffs more than twenty-six employees must bump their minimum wage up by a dollar, to a wage rate of $12/hr.
One of the highlights of California’s minimum wage laws is the way they deal with tipped employees. There’s no reduction in the minimum wage rate that tipped employees receive. Employees still need to form a collection amongst themselves, though, to pool tips and share it equally among their co-workers.
Itâs good practice to document your minimum wage rates for each fiscal year and report changes you make to your companyâs minimum wage policy.Â California is relatively strict about compliance poster obligations for business owners. The state asks that all business owners post their business’s policy regarding wages earned, which includes minimum wage rates.
California uses its UI tax to keep compensation programs afloat for people who are unemployed. Any employer who has spent more than one-hundred dollars on employee wages needs to record and report UI taxes. This is an important difference between California and most other states, which usually follow federally mandated unemployment tax provisions. California’s cap on annual taxes paid to the state — $7,000 — applies to UI taxes as well. The EDD is responsible for modifying the rate schedule unemployment insurance uses on an annual basis. Business owners take that year’s given rate schedule and contribute 3.4% for at least two years.
New Hire Reporting
You’re responsible for reporting new employee information to the California New Employee Registry within the first twenty days of their employment. These reports also go to the EDD, so be careful not to miss deadlines for reporting information on your new employees.
This rule also applies to anyone you’re rehiring if it’s been more than sixty days since their departure. Your information on new hires, as well as rehires, gets reported straight to the New Employee Registry (NER), which helps California work on existing new hire reporting laws. Currently, California does not offer any exceptions for new hire reporting. If you hire or rehire a new employee, you must report their first and last name, social security number, home address, and the date they began work.
California’s Fair Employment and Housing Act requires business owners to adopt equal hiring policies. It’s against the law to discriminate against potential hires on the basis of their race, sex, gender, and much more. The state offers employees multiple ways to file a claim for workplace discrimination. At the state level, the California Department of Fair Employment and Housing (DFEH) is responsible for addressing workplace discrimination claims; the same is true for the Equal Employment Opportunity Commission (EEOC) at the federal level.
Technically, you’re not legally bound to give your employees vacation time and PTO if you operate your business in California. With that said, it’s a good idea to have a way for employees to accrue a fixed amount of PTO per year so that they can take some personal time off. If you do establish a company-wide PTO policy, California considers the PTO you distribute as wages earned by an employee.
California does, however, mandate paid sick leave to be given to all exempt and nonexempt employees. And, if an employee collects more PTO than they use in a given year, youâre responsible for paying the amount equal to wages accrued. You need to do the same thing for employees who quit or are fired, since PTO distributed under PTO policies is technically wages owed to your employees.
California defines rest breaks as 10 minutes of paid rest. The state makes a compromise with employers by defining lunch as an unpaid break of 30 minutes. However, employers are responsible for paying employees a paid hour of time worked if they don’t get to take a break on a given day.
Certain urban districts in California require that employers pay out sick leave to their employees. This varies based on the area, but it’s important to be aware that the state fines businesses that don’t comply with these labor laws. These rules are typically most common in urbanized districts with different local-level laws.
Child Labor Laws
California’s child labor laws prevent anyone who is 13 years old or younger from working at a business operating within the state. Labor laws in California restrict people who are under 18 years old from working without a permit. Youth between 12 and 13 years old can only work during school holidays and vacations, and only up to four hours per week. The laws exist generally to prevent persons under 18 years from providing exploitable labor and economic vulnerability.
You’re responsible for paying your employees twice monthly on your designated paydays. Per California’s Labor Code Section 207, business owners need to show some proof of payment to their employees. This notice of proof includes when you paid an employee, the day you paid them, and where they were paid. For employees whom you have terminated, youâre required to reimburse them with any remaining unremitted wages they have earned.
Your W2 employees fund their own insurance for state disability, usually referred to as State Disability Insurance (SDI). This means you can choose to provide benefits for disability insurance on top of what your employees already get. These laws can get trickier for 1099 contractors who don’t do business for you or anyone else within California.
Insurance for state disability accounts for illness or injury that happens in your place of business. You need to withhold the SDI rate against the first $122,909 of your employee’s wages. Your employees are responsible for contributing taxable income toward this state-mandated program, and as of 2020, the rate for SDI taxes is one percent of their annual wages. Employees can’t contribute more than ten percent of their first $122,909 in annual income toward SDI taxes.
Workers’ Compensation Insurance
Rates for your workers’ compensation coverage start with work classifications for your employees’ positions. Perhaps you staff someone whose class code comes out to a nice, round number you can use to calculate their rate, say $0.50. Take their salary, another hypothetically round number of $100,000, and divide that by 100. You’re left with the following formula: $.50 x $1000. Obviously, this will change based on your employeesâ state-designated class codes and salaries earned, but this formula gives insight into the calculations you can expect to see.
Workers’ compensation provides required coverage to employees in nearly every state of the country. In California, businesses are required, at a minimum, to put down $500,000 toward a workers’ compensation insurance policy for their company. You need to cover each of your employees with $100,000 and put the same amount toward a minimum limit toward occurrences your plan covers. Employers are allowed to dispute claims for occurrences off-premises of work or during volunteering. You are still, however, required to cover injury and illness that occurs during work hours.
How To Calculate Payroll Taxes In California
California’s federal-level payroll taxes include the Federal Unemployment (FUTA), Social Security (FICA), Medicare (FICA), and Federal Income (FIT) Taxes. You can calculate payroll taxes at the federal level in California largely the same as you would in other states.
Employers are responsible for contributing toward these tax withholdings except for FIT, while employees only contribute toward FICA and FIT.Â Remember that California also requires employer and employee payment toward UI, ETT, SDI, and PIT Taxes.
How To Do Payroll In California
Now that you’re familiar with California’s different levels of payroll taxes, you can begin looking at ways to submit your payroll reports and how to accurately calculate what you owe the state and federal governments.
Step 1: Make Sure You’re Following All California Payroll Laws
Be certain that you have the correct state and federal forms to submit payroll by each due date. Federal forms (Form 941) and state forms (DE9, DE 9C) should be submitted on a quarterly basis. Business owners who miss these deadlines are subject to federal and state penalties that accrue exponentially the longer you wait to report your payroll.
Step 2: Gather Employee Documentation
Now that you’re ready to calculate your payroll contributions, you can decide on the way you’ll report your information. Choose either a printed or digital version of the Deport of New Employee(s) (DE 34) form, a completed W4 form, or an in-house form that satisfies the California New Employee Registry’s requirements. Remember that you need to start processing payroll for employees who’ve started work within the last twenty days.
Step 3: Calculate Your Employee’s Hours
Once you’ve picked your method to submit payroll information, make sure you have the correct rates to calculate your four different taxes: UI taxes, ETT taxes, SDI taxes, and PIT taxes. As a refresher on calculating California’s four state-level taxes, remember to:
Contribute a percentage between 3.4 to 6.3% of the first $7,000 of your employee’s wages. The percentage you contribute depends on how long you’ve been in business.
Put .1 percent of an employee’s initial $7,000 of reported income toward ETT. You’ll be contributing seven dollars to each person you staff annually.
Remind employees that they are responsible for submitting one percent of SDI-taxable paychecks on an annual basis against the first $122,909 of their wages.
Ensure all of your employees have completed a W4 form or DE 4 to report PIT tax.
For businesses with just a few people, you can consider using the wage bracket method to calculate payroll. The Wage Bracket method relies on your manual input, so be sure to closely follow the instructions detailed in the stateâs 2019 withholding schedules. The Exact Calculation method should be used when you need to automate your calculations. Multiple small business payroll software processing solutions exist to do just that. We suggest that you take advantage of any of the powerful payroll software tools available to crunch your staffâs payroll contribution numbers without errors.
The post Everything You Need To Know About Doing Payroll In California appeared first on Merchant Maverick.