Why Your Payment App Might Be Hurting Your Business

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Welcome to CreativeMind Smart Money, the podcast where

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creativity and business smarts collide.

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I'm your host, Samantha Eck, bookkeeper, business coach, and

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your go to guide for building the creative business of your dreams.

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Whether it's mastering your money, streamlining your systems, or growing

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your business, I'm here to share insights that empower you to thrive.

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Plus, I'll be bringing in industry experts to dive into all aspects

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of entrepreneurship, so you can turn your passion into profit

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without losing your creative spark.

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Let's get started

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You are listening to the Creative Minds Smart Money Podcast.

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And today's topic, as always is very exciting because I'm always

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excited about all things finance.

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I did wanna take a moment to pause and let you guys know we have some amazing

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stuff coming from profit and loss.

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Deep dives to, I know I mentioned last week, wine A and then

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we have some amazing guests.

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That are coming onto the show that I think we'll be able to provide some

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really valuable insights and information, as well as some more conversational

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interviews and things like that.

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And I'm just so excited for you guys to see what's coming this year and

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what I have in store for this podcast.

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But as always, if you guys are interested in hearing a but a specific topic or you

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know someone that would be super valuable to have on the podcast, please check the

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description box for that form and fill it out so that we can get them on the show.

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Let's dive into today's topic, which is all about payment processing apps.

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Now, I think we've kind of touched on these a little bit before.

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We've talked about different ways of getting paid and

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pricing and merchant fees.

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We've talked about all kinds of things, and I have so many different

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resources from my YouTube to my Instagram, to my threads, to my

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LinkedIn about a lot of these topics.

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But if you are here and you're like, Samantha, I just dig your podcast and I'm

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here to listen to your voice, then let's get into these payment apps, the pros,

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the cons, the hidden fees, best practices, because when we talked about 10 90 nines a

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couple weeks ago, we really analyzed what.

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You owe for 10 90 nines and why?

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Specifically, we don't use certain apps, and I really wanna talk about

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a few of them because they're very popular in the online service provider

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space or even the product based space.

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And some of these can actually really hard your business

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because they're so hard to track.

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Especially if you're someone who's like, I'm not ready for a bookkeeper.

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I want to do this on my own.

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A lot of these can cause a lot of chaos.

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So I wanna be, again, that resource and that lifeline for

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you when it comes to these and give you some really key insights.

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First of all, I wanna state plain and clear payment apps make it super easy

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to get paid, but there are certain ones that are beneficial for your business

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and are not, because there are MA apps that are actually made for business.

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Ones like Stripe, square, HoneyBook, things like that, that

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are actually purposefully designed for business are 110% fine.

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But today I really want to touch on the ones that are not designed.

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For business and can actually cause you a lot of stress and a lot of worrying.

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So those specifically are PayPal, Venmo, Zelle, cash App, apple Pay,

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Samsung Pay, whatever those are.

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Now, I'm not saying you can't utilize those because if you can pay through

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Cash App, apple Pay, Google Pay, I think a lot of those payment processors now

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allow you to pay with those methods.

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And that gets hard because it gets hard for me to say that it's okay to use those.

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Because a lot of the times when you're utilizing those, it's utilizing

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those from the personal sense and not necessarily from the business sense.

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So first of all, yes.

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The pros of using those apps is that they're convenient, they're easy to use,

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and you might already be familiar with them, especially if you're someone who

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venmos your family money all the time and you just kind of pass it off to them.

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It might feel really easy for you to utilize that in business there is.

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Of course a Venmo business account.

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But what I found a lot of the times when I start working with clients

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is that they're not utilizing a Venmo bus business account.

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They're using their personal account, which can cause a lot of issues

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because when you're using that personal Venmo, it's not charging you the fees.

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And you might be like, oh, hey, that's great.

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I don't need fees.

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But you are technically illegally.

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Selling services on a personal platform, and it's not meant for that.

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It's not made for that, and you're not supposed to, because the IRS can't

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track that, and it can also create kind of like a red flag for them.

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So things like that as well as PayPal.

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Now, I will admit PayPal is made for business, but I don't recommend it at all.

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PayPal might seem super easy.

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It might seem really straightforward, but it can cause a lot of issues, and

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PayPal is not friendly to track at all in any sort of sense with your.

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QuickBooks, especially some of the ones I've seen, because a lot of the times

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people are transferring money in and out.

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They sometimes spend money from their personal account for PayPal because when

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you're logged into PayPal, you're just kind of logged in and you don't realize

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that you're in your business account and then all of a sudden you spend money.

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So.

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PayPal again, is one of those where I'm like, I don't think

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you should use it at all.

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If someone's paying you through PayPal, that's fine.

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I really don't think you should be utilizing it for expenses and things

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like that because, and that gets messy really, really fast, especially if

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you're someone who also uses PayPal.

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On the personal side, I think Zelle is one of those special

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exceptions because with Zelle it.

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You can actually set it up to send from your business bank account,

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and it's still gonna reflect in your business bank account.

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The only problem I see with Zelle is a lot of the time people aren't detailed enough.

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So there's actually a note section in Zelle in a memo where you can

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put exactly what it's for, but usually people will just send money.

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So my suggestion is if you are going to use Zelle for your

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business, which you absolutely, absolutely can, there's no fees.

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I would highly suggest that you actually utilize the memo

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feature and put what it's for.

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Now, of course, again, a lot of people pay contractors

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through Venmo, things like that.

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I, I'm not sure if you are aware of this, but there are payroll processing apps

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that you can use to pay contractors.

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I know that that adds a cost.

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To your plate, but a lot of times it's actually better to use something like

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Gusto or Patriot or whatever it is to pay a contractor rather than Venmo or

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something else like that, because it's a lot easier to track, and it makes it a lot

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easier to get their information as well.

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So of course when we're talking about the pros, there's a lot of pros.

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Again, like I said, because you, it's just easy to use and understand.

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But I think there's a lot of cons as well.

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There's a lack of protection, when it comes to tax season.

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There's a lot of headaches and transaction limits, but

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there's also just a lot of like.

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Difficulty with tracking things.

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PayPal in QuickBooks is notoriously a nightmare for bookkeepers because

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you have so many different things going on, and PayPal doesn't allow

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for like bookkeeper specific.

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Access.

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You have to like, you can do that, but then it like it locks you

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out if you use the same email.

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It's very confusing because I actually used PayPal for one client

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and they use my like main email.

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I've started to use that like plus feature that you can use for Gmail,

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but they use my main email and.

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It got confused with my own personal PayPal, and it just caused a whole

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bunch of issues, but not the point.

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It can just get really messy because you have so many different things

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coming from so many different places, which is why I say specifically,

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if you're gonna use it for payment processing only, like you're going to

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receive payments, that's 110% fine.

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But if you're going to use it to also buy expenses, it can

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become such a nightmare to track.

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Now, of course, when we think about all these cons, we also want to

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think about certain things such as processing fees, which are universal.

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And I think we've talked about them before.

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But if we haven't and you guys want to hear more about merchant

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fees, please let me know.

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I'm happy to expand on them and expound on why they're important and essential.

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But processing fees are a big thing because anytime you use PayPal

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for business, Venmo for business or I don't know if Cash App even

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has a business account, but PayPal and Venmo are the biggest ones.

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They have processing fees.

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Those processing fees are a part of business.

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They're not so, and a lot of states will actually, it's illegal to do some sort

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of like surcharging to recoup those fees.

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Where I am in Texas, it is actually illegal, so you can't surcharge.

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Now there's certain like ways around that, especially if you build it into

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your pricing or if your payment processor kind of like just makes them pay the, the.

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Credit card fee.

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It really depends, but there's a also a huge risk of chargebacks.

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Both PayPal and Venmo have chargebacks that more often than not, side with the

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customer side rather than the buyer side.

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Now, I know you can have a lot of protections around that and everything

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that you can fight back against it, but you're more at risk with

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using things like that than you are.

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Using like an actual full blown payment processor for processor.

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For example, with HoneyBook, you already have your contract, you

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already have everything like that.

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Now, I have heard nightmares about HoneyBook before where people have

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gotten their money taken, but same thing with Stripe and everything like that.

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But I think it's more difficult to get money back on platforms like

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PayPal and Venmo, where they're more likely to side with the consumer than

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they are to side with the seller.

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And then of course you have your potential tax implications.

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If you're using personal versions of PayPal or Venmo, it can just

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be a huge tax implication because it's not getting recorded properly.

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And now your income is kind of just like, or being sent to a personal account and

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then send into your business account.

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And you want everything to be official.

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You want everything to be as clear as possible, so.

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If you are going to use them and you're like, Samantha, I really do.

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Just like, I love PayPal.

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I just wanna use PayPal.

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I get it.

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I know I just broke my ass, but I, I a hundred percent get it.

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I understand that that's something that's really easy for you to use.

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If you're going to use any of these, I really do suggest Zelle

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over anything because like I said, it's really easy to track.

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It can come right out of your business account.

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You can add that memo.

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But if you're gonna use PayPal and Venmo, please use the business versions of them.

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Please don't use personal versions.

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I would not suggest Cash App at all.

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I would not suggest Apple Pay or Samsung Pay or any sort of app like that.

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If it does not come directly from your debit card, I really wouldn't suggest it.

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But of course, if you really, really wanna use PayPal or Venmo,

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please use the business versions and please only use them for business.

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I will suggest as well that if you use Venmo, both personally

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and for business, that you.

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Don't transfer personal money out through Venmo.

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You put your money into your business account from Venmo, and then you transfer

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it to your personal account because the tracking for that can just get so chaotic.

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And so confusing for you or even your bookkeeper if you have a bunch of things

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going on in the background of Venmo.

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'cause I've seen it a couple times now where people both have a bus business,

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Venmo and a personal Venmo, and they transfer from their business Venmo

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straight to their personal account and it can just cause so much chaos.

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I would prefer you use something like QuickBooks or Square or Stripe or

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HoneyBook or whatever it is that has an invoicing software built in and doesn't

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have these kinds of like just random payments that come from places, but

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absolutely, if you really have to, I would prefer you use the business accounts

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of PayPal and Venmo, of course, with the very professional payment system.

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It gives you really good ease of use to get those payments right

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into your business bank account.

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And they're really bookkeeping friendly, so like Stripe square, HoneyBook,

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things like that are really bookkeeping friendly and really easy to find fees.

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When you start doing Venmo and PayPal and things like that, it

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can just cause a lot of stress.

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I. In pain, and I think I've mentioned this before with Square, but I would

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never, ever, ever get any of their banking products getting any of their banking

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products, whether that's a checking savings account or something like that.

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Especially the savings account can mess up your books huge because they can

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become such a huge source of stress.

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It's not easy to track all that when you have a bunch of stuff

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transferring or auto transfers with savings and things like that.

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It can become a nightmare very, very fast.

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And this is not me saying, oh, make it easy for me to do your

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books or make it easy for any other bookkeeper to do your books.

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This is me saying that if you are someone who is like, I'm committed to doing my

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own books and I wanna make it as easy as possible on myself, I wanna make sure

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that you're aware of all of the issues that these certain apps can cause you.

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So payment apps, again, aren't bad, but they're not really a replacement

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for proper financial systems.

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If you're like, I really want like a good proper system, then you need to look

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at those other ones that I mentioned.

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I want you to just evaluate your current payment methods and see if

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you can really, if they align with your long-term business goals, but

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also if you can cut some of them out.

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I know it might seem easy for someone to just be like, oh, hey, just Venmo

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me for this or pay me this way.

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If you can cut those out, I promise you, you'll save yourself so much

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heartbreak and so much heartache trying to figure things out at tax time.

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Then if you were to get to the end of the tax season and now you have

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to go through and sift through all of your Venmo transactions to find

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out what was actually business.

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If you found this episode useful, please remember to subscribe, leave a review,

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and share with a fellow business owner.

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As always, I hope you have an amazing rest of your week,

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and we will see you next week.

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Farewell fellow Travelers.