Get Paid Faster with Online Payment Options

“Pay now!” Having this button on your digital invoice can shave 20 days or more off the time you usually wait for customers to pay. People love the convenience and flexibility of online payment. And that often translates into immediate action.

Here’s how small businesses can make online payment work for them.

Online Payment Methods

There are a variety of instant payment methods that don’t even require customers to visit their bank’s website. The most popular ones include:

• Automated Clearing Houses
Well-known providers include PayPal and Stripe

• Credit Cards
MasterCard, VISA, American Express, and Discover are among the most recognized. Customers like this option because it gives them the flexibility to pay you on time even if they don’t have the money right now. Then their debt becomes the credit company’s headache, not yours.

• Debit Cards
Customers transfer payment directly to you from their bank.

• Direct Debit
Customers authorize automatic, recurring payments from their bank to you. This option is ideal for retainer agreements or ongoing services which you would normally bill monthly.

Using a Merchant Service Provider

Merchant service providers are companies who will handle the online payments for you. Choose one that specializes in the online payment method you’ve decided to offer (it’s unlikely that you will find it necessary to offer more than one or two methods). Getting set up is usually free; after that, there will be a fee per transaction.

To work with a merchant service provider, you will need online invoicing software. If you have the software already, there should be a section for add-on apps with a list of providers that can integrate with your software. Choose your provider and use the wizard to install the app yourself, or have your accountant do it.

It’s important to note that you don’t have to accept online payments every time; the service can be switched on and off as often as you like. Many businesses prefer not to offer online payment if the invoice is for more than $5,000, because the transaction fee would be too high.

Dealing with Transaction Fees

Fees that you can typically expect are:
• Credit and debit cards: 2% to 4% of the invoice value
• Direct debit: not more than $2 (depends on the amount of the transaction)
• Stripe and PayPal: 2.9% of invoice value plus $0.30

For accounting purposes, transaction fees are a business expense that can be deducted on your income tax. Also, be sure to integrate this expense into your bookkeeping for the order, so that your profit is calculated correctly.

For small businesses that are more vulnerable to cash flow gaps when payments are late, online payment can be a dream come true. By making it easier for the customer to pay, you can expect more on-time payments — and one less obstacle standing in the way of growing the business you love.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

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How to Turn Your Vacation into a Tax Write-off

Wait a minute, you say — the IRS frowns on claiming vacation costs as business deductions. But you can sneak some playtime into a work trip, and keep it all perfectly legit. Here’s how to follow the rules while saving a bundle.

What’s Considered a Business Trip

These are the criteria you must meet to satisfy the IRS’s definition and qualify for deductions.

1. The primary purpose of the trip must be business. You must spend the majority of your days away in work-related activities, such as meeting with customers. The days you spend traveling to and from the destination count as business days, so meeting this requirement is easier than it seems.

For example, you could fly to Honolulu on Monday, attend a conference Tuesday through Thursday, hit the beach on Friday and Saturday, and fly home Sunday. That would be considered 5 workdays and 2 vacation days.

1. The trip must be planned in advance. Write out a detailed itinerary and what you’ll be doing each day. Get it time-stamped well in advance of your departure; for example, you could email it to a colleague.

2. The trip must be somewhere other than your “tax home.” In other words, you must leave the location where your business is based on longer than a normal workday.

3. The trip must be for “ordinary and necessary” activities. For example, it may be necessary to rent a car during your stay, but it’s not necessary to rent a luxury class one. There’s a lot of room for interpretation here, but it’s better not to try and push it, especially since the IRS penalties can be substantial.

Different Rules for International Trips

Traveling outside the USA offers even more opportunities for vacation deductions.

1. You only need to spend 25% of your days doing business.

2. If you spend less than 25% of your time working, you can still take deductions, but only as a percentage of the total cost. For example, if you spend 1 day out of a 5-day trip to Italy on business, that’s 20% of your time away and you can deduct 20% of your airfare.

What You Can Deduct

These are the expenses you can write off when you’ve met the criteria for a business trip.

1. Travel: 100% of air, train, bus, or other transportation fares as well as rental cars.

2. Lodging: 100% of the days you spend working. If you work your itinerary right, you may also be able to write off the vacation days, by sandwiching the vacation days in between workdays.

For example, you might fly to Orlando on Thursday, have a workday on Friday, see Disney World on Saturday and Sunday, have another workday on Monday, and fly home on Tuesday. Since it wouldn’t be cost-effective to fly back and forth for each workday, the weekend you stay over would be considered workdays.

1. Food and entertainment: 50% of all meals and entertainment that specifically facilitate business, or that are incurred while traveling to and from your destination. Keep receipts and good records in case the IRS asks.

When Family or Friends Come Along

You can’t directly deduct any of their expenses. However, in many cases, they can ride on your coattails for less than full cost.

1. Car Rental: As long as it’s the same “ordinary and necessary” car you would have rented if you were alone, nothing says there can’t be other people in the car.

2. Lodging: You can deduct the portion of hotel costs that you would have paid for a single room. For example, if you would have spent on a $100 single room when traveling alone but you’re in a $150 double with your significant other, you can still write off $100.

When Your Trip Doesn’t Quite Qualify as Business

You may be spending the majority of your days on vacation, and just happen to meet with a client while you’re there. Or maybe you didn’t get the necessary documentation to support your claim that it was a business trip.

You can still write off 50% of meals and entertainment you spent for business purposes. However, you can’t deduct any travel or lodging costs.

Need more help with deducting your vacation expenses? We’re here to answer any questions you have, and file your tax return correctly so that you get every write-off you’re entitled to.

All work and no play makes you a dull business owner. So go ahead and take some time for R & R. You deserve it!

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

7 Don’t-Miss Tax Deductions for eCommerce Businesses

Why settle for standard business deductions, when there are more opportunities to lower your tax bill, some of them seemingly tailor-made for eCommerce businesses? Before you prepare your return this year, check out this list of possible deductions.

1. Home office.

In order to qualify for this one, you must use at least one room in your home exclusively for business; working on your laptop in the living room doesn’t count. If you meet that requirement, you can deduct a percentage of nearly every house-related expense you can think of, including rent/mortgage, utilities, repairs/maintenance, and insurance premiums. (The percentage deducted is based on the percentage of the house’s total square footage that your office occupies.)

2. Office supplies, equipment, and software.

Furniture, computer, printer, camera gear (if used for photographing your merchandise), postage meter, inventory management software, paper clips — if it’s used in your office it’s usually 100% deductible.

3. Phone/internet.

You can deduct a portion of your phone and internet charges based on the percentage of time that you use them for business.

4. Transportation and travel.

Any car used for business purposes is eligible for deductions; even if it’s also your personal vehicle you can still deduct a percentage. There are 2 deduction options: a flat amount per mile or a total of actual costs such as gas and parking fees.

Other travel-related deductions include airfare, cab fare, tips, meals, and conference tickets.

5. Fulfillment costs.

You can deduct the costs of packaging materials and shipping to customers.

6. Subcontractors.

Whenever you use independent web developers, graphic designers, photographers, content writers, bookkeepers, temporary office staff — anyone not on your payroll — their fees are 100% deductible.

7. Merchant processing fees.

You probably use one or more credit card processors such as PayPal, Stripe, or Square. But did you know you can deduct their fees?

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.

 

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Inventory Control for eCommerce: Getting the Balance Right

As an eCommerce retailer, you may not have a brick-and-mortar store, or even your own warehouse and fulfillment facility. But that doesn’t mean inventory control has to be more difficult. With the right mix of tools and strategies, you can manage your merchandise supplies and turnover efficiently and cost-effectively.

Decide how much stock to keep on hand.

Your goal is to strike a balance between too little and too much. In most cases, a one-month supply will be enough to meet any unexpected increases in customer demand, without tying up unnecessary working capital or warehouse space.

To calculate your one-month supply, analyze sales and fulfillment information from previous years. If you’re a new startup, research the performance of your product category as a whole.

Allow for variables in your stock-on-hand plan.

Depending on your business, you may need to adjust inventory levels for:

  • Seasonal fluctuations, such as the Q4 holiday shopping season
  • Shipping time from the manufacturer to your warehouse, import delays, etc.
  • Store promotions such as an annual sale

Apply the same variables to fulfillment planning.

During periods of higher sales volumes, you will also need more packaging materials as well as additional employees to do the order processing, packing, and shipping.

Keep a close eye on your inventory — digitally.

Real-time inventory software can save a ton of time and effort. By using bar code identification, it automatically updates your stock levels whenever an item is sold, alerts you, and website visitors when an item is out of stock and tracks delivery to customers.

Keep a close eye on your inventory — manually.

It may seem old-fashioned, but a physical stock count is the only sure way to know what’s in your warehouse. Do it weekly, monthly, quarterly, or annually, whatever makes sense for your business.

Have a plan for out-of-stock incidents.

Your software should notify you in time to replenish stock before it runs out. But in case there are snafus at the manufacturer or in transit, be prepared to respond and keep customers happy:

  • Remove the product page from your website, or add an “out of stock” message letting customers know when it will be available again
  • Take backorders
  • Pay extra attention to stock levels of fast-moving products and reorder them farther in advance

Choose the right business management system.

A system that’s specifically designed for eCommerce is an invaluable asset. For example, it can show order processing and shipping costs in relation to revenues. Even better, it can link inventory management to other operating systems within your business, such as accounting and payroll, greatly reducing administration time and duplication of effort.

Organize your warehouse for a fast response.

Keep your best-selling items on the shelves that are easiest to reach. Slower moving merchandise can go in less accessible areas.

Consider off-site warehousing options.

The advantages of storing some or all of your inventory in other locations include reduced shipping time to your customers and saving on overhead. Check out:

  • Adding regional warehouse locations
  • Renting warehouse space from a national retail chain or postal service
  • Using Amazon FBA (Fulfillment by Amazon) — you advertise your product on Amazon and they handle merchandise storage, order processing, shipping, and customer service

Stay on top of record keeping.

For both current decision-making and long-term planning, “knowing your numbers” is essential. So checking them at the same time every day or week is a great habit to get into. (It only takes a couple of seconds with the right software, just press a button to see inventory status, turnover, and associated costs.) You’ll always have a clear picture of your inventory … and your business.

For successful inventory management, every eCommerce business must find the right balance between too much or too little stock, online and hands-on tools, and on-site or off-site locations. Most important of all, accurate records will reveal what’s working and what isn’t, so that the future will be even more rewarding than the past.

 

This post is intended to be used for informational purposes only and does not constitute as legal, business, or tax advice. Please consult your attorney, business advisor, or tax advisor with respect to matters referenced in our content. Xendoo assumes no liability for any actions taken in reliance upon the information contained herein.