Category: Finances

Bad Security Practices Can Cost You in More Ways Than One

Posted on by Scott Paape
Talus bad security costs you

3 minutes It can be a hassle to ask a customer for lots of extra information when completing a credit card transaction. But the time you save skipping questions isn’t the extra fees you may end up paying without even realizing it.  “Every time you accept a credit card, you pay a fee to a credit card processor,” writes Ben Dwyer with CardFellow. According to Dwyer, interchange fees make up the largest part of your total processing fee and are non-negotiable because they are set by the banks that issue the cards to customers.  “Every interchange category has specific requirements,” writes Dwyer. “If a transaction meets those requirements, it will be charged that category’s interchange fee.  Factors that determine interchange category According to Dwyer, there are a number of factors that affect what category a transaction falls into.  Some of these factors are out of your control, such as the brand or type of card being used. But there are some factors you can control, and those have to do with how the card is processed. Understanding those factors can help save you money. Processing Method There are two ways a card can be processed. Card-present transactions occur when a cards information is able to be read electronically. Card-not-present refers to transactions where the credit card information is manually keyed in.  Even if you have the physical card in front of you, it will be charged fees based on the card-not-present category if you manually key in the information.  Card-not-present transactions have higher fees because they pose a greater risk of error or fraud.  A recent study from the Federal Reserve reported that the amount of card-present fraud in the U.S. declined from $3.68 billion in 2015 to $2.91 billion in 2016, while the amount of card-not-present fraud jumped from $3.4 billion to $4.57 billion during the same period. Related: The Easiest Way to Make Your POS System More Secure Right Now Insert or swipe cards whenever possible When accepting cards in person, you should always try to swipe or insert the card. However, there may be times when a chip won’t read or a magnetic strip doesn’t work. In that case, manually keying in the information may be your only option.  “The information supplied with a credit card transaction impacts how it qualifies at interchange,” writes Dwyer. “Proper and complete transaction data is especially important for businesses that process card-not-present transactions and for those that deal with corporate and government cards.” What this means is, whether or not you’re swiping a card or entering the number manually, it’s important that you capture any data requested by your payment processor. Skipping prompted items,  such as the customer’s zip code, could result in higher fees and increase the risk of chargeback or fraud.  Train your employees Employee training can also play a big part in preventing extra fees. Just because you understand the importance of swiping a card whenever possible doesn’t mean your employees do. Train them to avoid entering credit card information by hand and consider a business-wide policy to cover the proper procedures if there’s no other option.  It can be tempting to skip those extra security questions that pop up when you have an impatient customer standing in front of you. Make sure your employees understand the importance of those extra security questions and that by taking the extra few seconds to enter them, they’re ultimately saving your business money. Also, make sure employees know to report any malfunctioning equipment immediately so technical problems can be resolved as soon as possible. EMV chip readers If you don’t already have one, you should consider obtaining or upgrading your POS to include an EMV chip reader.  EMV stands for Europay, Mastercard, and Visa.  Ellen Cunningham with CardFellow writes, “EMV cards, sometimes known as ‘chip’ cards, are an advanced-security credit card designed to reduce fraud by utilizing advanced technologies to prevent counterfeiting, skimming card data, and other types of fraud.” Using an EMV chip reader is one of the best ways to pay the lowest interchange fees. Visa recently reported a 76% drop in counterfeit fraud dollars for merchants who had completed the upgrade to an EMV chip system.  Prevent extra fees The best thing you can do to prevent those extra fees from piling up is to have a dependable and secure payment processor with an EMV chip reader like Talus Pay’s POS.  With simple setup and first-class customer support, you’ll be ready to start accepting payments in just a few minutes. And our experts are only a click or phone call away to help with any payment process problems you may encounter. […]

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Saving for Retirement: What Is the Best Plan for a Self-Employed Business Owner?

Posted on by Daniel Carleton
Talus Saving for Retirement

5 minutes The benefits of running your own business far outweigh the constrictions of working in a corporate environment. Being your own boss allows you complete creative freedom and promises a greater sense of fulfillment. But running your own business also puts the burden of success squarely on your shoulders. Self-employment makes saving for retirement more challenging as you’re missing out on employer-paid retirement contributions. That said, you do have access to several tax-advantaged retirement accounts that may help you save more because of your self-employed status. When seeking out retirement funding, you have a few different options—a traditional IRA, Roth IRA, SIMPLE IRA, SEP IRA or Solo 401k. Each of these plans is complex and varied, so you’ll need to determine the best fit for your situation. Let’s take a look at the rules surrounding each option. Traditional or Roth IRA According to Pew, 35% of private-sector workers don’t have access to an employer-based retirement plan, making an IRA a great starting place. Anyone with earned income can open an IRA. It’s one of the easiest ways to save for retirement when you’re self-employed. Depending on which type of IRA you choose (traditional or Roth), you can pay taxes at the time of the contribution or later, when you withdraw funds. If you’ve recently made the jump to self-employment, you can roll over your 401k into an IRA. Just remember, you’re in charge of your IRA, and that means you’re in charge of selecting mutual funds and other investments. Here are the differences and rules for each of these options. When opting for a traditional IRA, the IRS allows you to deposit up to $6,000 per year if you’re under the age of 50 and $6,500 per year if you’re over 50. Your contributions are tax-deductible and are not taxed until you withdraw funds. Traditional IRAs come with a great feature for non-working spouses. The breadwinner has the option to fund an IRA for their non-working spouse, allowing the non-working spouse to save for the future using a tax-advantaged retirement account. This is called a spousal IRA. While there are no income limits dictating what you can contribute to a traditional IRA, there are limits as to what you can deduct from your taxes. However, since the limits are based on whether you’re covered by a qualified retirement plan at work (401k), these won’t affect you if you work for yourself. RELATED: Business Budgeting, Cash Flow and Taxes A Roth IRA, on the other hand, comes with income and contribution limits. As of 2019, single filers must have a modified adjusted gross income of less than $137,000. If you’re married and filing jointly, your adjusted gross income must be less than $203,000. And if you’re married and filing separately (and you lived with your spouse in the last year), your modified adjusted gross income must be less than $10,000. If you exceed the limits that apply to your situation, you cannot contribute to a Roth IRA. One of the big advantages of a Roth IRA over a traditional IRA involves the withdrawal fees. You can withdraw money contributed to a Roth at any time and for any reason without paying taxes or penalties. That’s because you paid taxes when funding the account. The annual contribution limit for 2019 is $6,000 if you’re under 50 and $7,000 if you’re age 50 or older. When you reach age 70 ½, you will be required to withdraw a specified amount from a traditional IRA account each year. The amount you’re forced to withdraw is known as a Required Minimum Distribution (or RMD). Some retirees opt to convert a portion of their retirement savings to a Roth IRA to avoid the RMD. According to Ed Slott, a nationally recognized professional speaker and author of numerous financial and retirement-focused books, the key factor in making this decision should be how soon you’ll need the funds. “It doesn’t pay to convert to a Roth if you’re going to need the money in 10 years,” Slott explains. “As a business owner, you could need money to keep you afloat. Do a cost-benefit analysis because it’s not worth the tax cost if the conversion won’t parlay long term.” In other words, if you’re going to need the money soon, don’t convert to a Roth IRA. The hit you’ll take paying taxes at the time of conversion will outweigh the benefit of potential growth. It’s also worth noting that, technically, you can’t borrow money from your IRA. However, there’s an exception to the rule. If you only need the money for a short period of time—60 days or less—you’re allowed to withdraw the money provided you redeposit the funds within that 60 day window. This is known as the rollover rule. RELATED: How the Changes in Tax Law Affect You and How to Prepare Solo 401(k) A Solo 401k, also known as a One-Participant Plan, permits you to fund your plan from both your personal compensation and business income. This means your annual contributions could be significantly higher. Solo 401(k)s work just like company-sponsored 401(k)s. The difference is they’re intended only for self-employed workers or individuals who employ no full-time workers (other than themselves and their spouses). With a Solo 401(k), you can contribute up to 25% of your self-employment income per year until you reach the cap—$54,000 if you’re under 50 and $60,000 if you’re 50 or older. According to IRA123.com, you must meet two eligibility requirements to benefit from a Solo 401(K): The presence of self-employment activity The absence of non-owner full-time employees You (the business owner) and your spouse are considered “owner-employees” rather than “employees,” and as such can work full-time for the business. The following types of employees typically don’t interfere with eligibility for a Solo 401(k): Employees under 21 years of age Employees who work less than 1,000 hours annually (full-time) 1099 contractors Some union and non-resident alien employees Although it should only be used as a last resort, you may borrow from the funds in your Solo 401(k) […]

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Using Merchant Cash Advances to Open a Second Store

Posted on by Scott Paape
TP MCA second store

4 minutes If you’re considering opening a second store, you’re probably knee-deep in budgeting for the expansion. Even if your business is doing well, opening a new location is no small thing. How do you pay for that? A merchant cash advance (MCA) may be the answer. This quick, easy funding option has grown in popularity in recent years for good reason. Traditional small business loans are harder to get. A merchant cash advance could be a good fit for your business if you meet the following four criteria: You’ve been doing business with your merchant services provider for at least 4 month A high percentage of your business is conducted via credit card sales You need a relatively small amount of capital The cash advance will drive immediate revenue Because your merchant services provider already knows your business and its history, they usually feel more comfortable approving you for an advance. How Cash Advances Work A merchant cash advance is a quick way to gain access to capital. Here’s how it works. You the capital you need for your expansion now and you pay it back through future credit card receivables. This is a great option for several reasons. Repayment is easy and happens as you turn a profit. Plus, this type of funding is not a business loan and does not show as debt or a loan on your credit. An MCA has an agreed-upon repayment period that usually lasts from three to 12 months. The higher your credit card sales, the quicker you can repay your merchant cash advance. Businesses like restaurants and retail shops are ideal candidates for a merchant cash advance because the majority of their revenue comes from credit card sales. If you expect your second store to generate revenue quickly via credit card transactions, an MCA might be right for your business expansion. Benefits of Merchant Cash Advances Working with a merchant services provider like Talus Pay can make getting capital for your second store easier. MCAs are particularly beneficial for businesses with a strong credit card sales history, even if you have difficulty qualifying for business loans. MCA perks often include: No application fees, hidden fees or closing costs A simple, one-page application with no financial statements required Quick approval – typically in 24-48 hours No impact on your credit report as debt or a loan The flexibility of repayment based on credit card sales RELATED: The Business Owner’s Guide to Payment Processing Best Ways to Use a Merchant Cash Advance Now that you know how a merchant cash advance works, let’s explore some of the ways you can use a quick influx of cash to support opening a second store. While there are quite a few essential expenses that come with expanding your business, there’s also some good news. The boost to your revenue should fuel your MCA payback. New Inventory You’ll need to stock your new location to get up and running. An MCA can be used to purchase these items upfront. Lance Eubanks, the owner of Greenway Express Carwash, says “I recommend using a merchant cash advance to purchase products for your new shop because as you sell them, you’ll immediately pay back your advance.” Equipment Purchase Merchant cash advances can also be helpful for purchasing equipment—especially equipment that will immediately drive revenue. For example, auto repair shops need lifts. That essential purchase will allow them to increase the number of cars they can service which boosts revenue. RELATED: The 2019 Automotive Benchmark Report Store Build-Out You can’t open a new location without actually preparing the retail space your second location will operate in. An MCA can provide you with the cash on hand to fund materials and labor. Fast-track your make-ready so you can see quick ROI. Payroll Taxes Eubanks also believes a cash advance can be helpful to cover payroll when you’re opening a second location. “You’ll be training new people and spending extra money on payroll while you ramp up your revenue,” he explained. “It can be a relief to have some of your additional payroll funding covered by a cash advance.” RELATED: How to Prep for Taxes in Only 10 Minutes per Week Consolidating Debt The process of opening a second location will need additional funding and could leave you, at first, with more expenses as you figure out the P&L. In preparation for this expansion, you may want to consolidate some business debt as you make adjustments to your budget. A MCA gives you an easy way to accomplish just that. Plus, repayment arrangements are then tied to your profitability. You’ll pay off that business debt little by little with each and every transaction. Marketing and Advertising Your business may already have a solid marketing budget, but opening a second store often means extra advertising expenses. When you consider the additional costs—everything from printing and ads to a video to announce the new location—a merchant cash advance can come in handy. This is an easy way to cover the costs of getting the word out. Do You Qualify? The criteria for a merchant cash advance from Talus Pay is straightforward. You need to have a minimum of one year of business under your belt, your average monthly credit card processing should be at least $2,000, and you must batch out at least 10 days a month. If you’re ready to find out if your business is a good fit for a Talus Pay merchant cash advance, reach out to a member of our consulting team today. We’re here to help your business grow, and an MCA can go a long way to making you more successful.. KEEP READING: 13 Ways to Improve Profitability […]

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Opening a Second Business Location? Here’s How to Fund It

Posted on by Chad Vanags
Talus second business location funding

5 minutes According to a 2017 U.S. Small Business Administration report on access to capital for small businesses, “only 12% of businesses use a loan for startup capital.” The rest rely heavily on credit cards, personal assets, funding from friends and family, and alternative lending options. “Only 12% of businesses use a loan for startup capital.” – U.S. Small Business Administration   Finding adequate financing is a consistent issue for SMB leaders, especially when they’re ready to grow and open a second business location. Before you start securing capital for your next shop, take a good look at all of the different types of funding available for business expansion. Create a Budget Before you start shopping for capital, you’ll need to create a budget for your second store. This will help you tally up the money you’ll need to get things started, as well as the ongoing overhead as you build new revenue. Here’s a quick look at common expenses for second business locations. Rent You’ll likely need a security deposit for the lease and utilities, as well as the first month’s rent in advance. You may also need cash flow to cover the rent for the first few months while you build the business. Renovations It’s rare that a retail space is perfect, so you’ll probably need to do a build-out to suit your business. This may include construction costs, fixtures, and signage. Insurance Be prepared to add the new shop to your liability insurance and pay a higher monthly premium. Inventory It can be expensive to initially stock the store, so make a detailed plan to find out exactly how much you need to budget to get set up. Technology This category includes POS systems, computers, phones, alarm systems, and tech support. Marketing You’ll need to advertise to drum up business for your new shop, so plan on extra expenses for advertising, public relations, special events, and website updates. Staff A second business location means new staffing costs, which include payroll, taxes, and training. Supplies Don’t forget the little things like hangers, office supplies, cleaning supplies, and all the items you need for day-to-day operations. Write Your Business Plan After you’ve crunched the numbers on anticipated expenses for your expansion, it’s time to prepare a business case. You should do this regardless of what kind of lending you’re going after. Here are a few of the items you’ll need: Current Business Overview Include a brief history of your business, the current and projected demand, and an overview of your services and products, suppliers, and customers. Your market analysis and competitive research can also be included here. Complete Financial Information Gather up your personal and business tax returns, financial statements, and any other financial details that can prove you’re a safe bet. Don’t forget details about how you plan to use your capital funding for your second store. Business Expansion Goals Outline your business goals for the next three to five years and explain exactly how you plan to make a profit in your second business location. This is a great place to include your marketing plan. You may not need all of these business plan details for every lender, but it’s smart to have them gathered from the get-go so you’re ready for any potential questions. Research Capital Funding Options Financial decisions are a big deal, so take your time doing the legwork to find the right funding or mix of funding to make your business plan a reality. Don’t just think about how you can finance the next few months to get your second store off the ground. It’s wise to consider what kind of financing will ensure growth five years and beyond. Consider the following options. Small Business Survival Rates 80% survive the first year 50% survive 5 years 30% survive 10+ years Reported by the U.S. Small Business Administration Investors From venture capital to crowdfunding, getting help from investors can provide cash flow for your business operations. Investors typically don’t require a scheduled payback like a traditional small business loan, but you may have to offer equity in your business or some other reward. Lance Eubanks, owner of Greenway Express Carwash, used investments from his family to fund his business and says, “If investors can share even a small amount of money, that can provide the down payment you need for a bigger business loan.” Bottom line: Funding from investors offers flexibility in repayment, but the payments may be in the form of equity, services or goods. Also, if you borrow money from friends and family, the financial relationship could cause tension. Small Business Loans Getting a traditional small business loan from a credit union, bank or the Small Business Administration (SBA) can cover long-term expenses like real estate and large equipment costs that you’ll be paying over several years. The downside is that you have to jump through a lot of hoops to get approved. Eubanks found that securing a traditional loan requires considerable effort and patience. “You’ll need collateral and they’ll look at all of your financials—personal and business. The approval process can take 90 days or longer, so you need to have a plan and get started early.” There’s also the chance of not getting approved. Biz2Credit’s Small Business Lending Index shows that alternative lending might be a better choice than traditional loans. Loan Approval Rate by Lender Type Big Banks 23% Credit Unions 42% Small Banks 48.7% Alternative Lenders 60.7% Institutional Lenders 62.8%   If you have the time to pursue it, a Small Business Administration loan could be a great option. The SBA partners with lenders, micro-lending institutions, and community development organizations to offer loans with lower interest rates, lower down payments, and other perks. Bottom line: Loans are great for businesses who have good credit, want a long-term loan, and need a large amount of money. Grants The SBA also offers grants to businesses who meet their criteria. Typically grants are awarded to companies who are doing research and development in […]

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