Top 10 Tax Deductions For Freelancers

Understanding the nuances of the small business tax code has never been a walk in the park (especially when the tax laws are constantly changing), but when it comes to freelance taxes…? Let’s just say that those are a whole different ballgame.

According to a 2015 study done by Xero, 73% of freelancers don’t deduct any expenses when filing their taxes. Considering how many people now rely on freelancing gigs as a primary source of income, that number is frankly shocking and prompts the question: Are you maximizing your tax deductions as a freelancer?

If you are a freelancer, there are 10 very important tax deductions you need to know about. Gaining a basic understanding of how freelance taxes work and what you can and can’t deduct can save you a good chunk of change and spare you from trouble with the IRS down the line.

Read on for several money-saving tips and to learn about the top 10 tax deductions available for freelancers.

The Basics Of Freelance Taxes

Freelancing is a form of self-employment in which a person offers their service for a fee (rather than relying on a traditional employment arrangement). A person is required by law to pay taxes to the US government if they receive a freelance income of $400 (or a church employee income of over $108.82) in a given year.

When you’re paid by a traditional employer, standard taxes on Medicaid and Social Security are automatically taken out of each paycheck. This isn’t the case for freelancers and independent contractors, who are instead required to pay self-employment taxes. The self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicaid). In addition to self-employment taxes, freelancers are also required to pay income tax.

If you are a freelancer, you will have to save a certain percentage of your income in order to pay your taxes. Most financial professionals advise freelancers to save around 25% (or even 30%) of their total income to cover these taxes. Freelancers may be required to pay taxes every quarter rather than annually (cue estimated quarterly taxes), depending on the size of their earnings.

Estimated Quarterly Taxes

Most tax-payers are used to the April 15th deadline when filing taxes for the previous year. However, freelancers are often required to pay estimated quarterly taxes. Instead of paying taxes once a year, some self-employed individuals will pay these estimated taxes four times a year.

Quarterly Tax Period Estimated Quarterly Taxes Due

January 1 – March 31

April 18

April 1 – May 31

June 15

June 1 – August 31

September 17

September 1 – December 31

January 15

Note: These due dates are specifically for 2019 and will vary slightly each year.

So, how do you know if you need to pay estimated quarterly taxes? According to the IRS, individuals who expect to pay at least $1,000 in taxes for the year should file estimated quarterly taxes instead of waiting until April to file. The 1040-ES form can help you approximate your total income for the year as well as your estimated tax payments.

As always, we recommend consulting with an accountant or tax professional for tax advice — especially when it comes to freelance taxes. They will be able to assist you in officially determining whether you need to pay estimated quarterly taxes, and if so, how much.

Tracking Freelance Finances

When you’re self-employed, it’s incredibly important to keep your finances organized. That’s where accounting software comes in.

Most freelancers would probably rather be finding new clients, creating new marketing strategies, improving their brand and social media presence — basically doing anything but accounting. But earning freelancer income is only half the battle. Managing that income and keeping track of your business earnings and expenses — that’s what sets you up for long-term success.

Luckily, there are multiple accounting programs that are designed specifically for freelancers, like QuickBooks Self-Employed. QuickBooks Self-Employed helps freelancers keep track of their income and expenses, manage deductions, and calculate estimated quarterly taxes. It even includes a Turbo Tax plan so you can easily file your taxes. Read our full QuickBooks Self-Employed review to learn more.

Whichever accounting software you choose, it’s important to record your income so you can set aside the proper amount for taxes, track your expenses so you can maximize deductions, and keep your finances organized in case you ever face an audit.

Tip: Hire A Tax Professional

The biggest tip I have for freelancers is to hire an accountant or tax professional. When you’re self-employed and trying to save as much money as you can, it seems counterintuitive to hire an accountant, but trust me — the expense will more than pay for itself.

As a previous independent contractor, I’m speaking from experience here. When I started out as a 1099 contractor I knew a little bit about self-employment deductions. I saved 25% of each check, kept a careful record of my business-related mileage, and saved all of my business expense receipts. But without the help of an accountant, I still would have missed out on over $3,000 worth of deductions I didn’t know about.

Accountants and tax professionals can help you navigate the murky waters of freelance taxes and find you all sorts of savings. They know exactly what you can write off, which deductions you qualify for, and which deductions could put you on the radar for an audit. This expertise is priceless.

But, don’t let your accountant do all the work. Knowing which deductions you are eligible for and keeping careful records of your receipts and expenses throughout the year can help ensure you save as much on your freelance taxes as possible. (And, since accountants are often paid by the hour, the less work they have to do the more money you’ll save.)

Top 10 Tax Deductions For Freelancers

Top Freelance Tax Deductions

Whether you about to file your taxes and are searching for last-minute savings or you are trying to track your deductible expenses throughout the year to get ahead of the tax game, here are the top ten tax deductions freelancers and independent contractors should know about:

1. Self Employment Tax Deduction

Rember when we said that freelancers are required to pay a 15.3% self-employment tax? Since freelancers are self-employed, they serve as both the employee and the employer, resulting in the 15.3% tax rate. In a traditional job, half of that tax would be covered by the employer.

This deduction allows you to deduct the employer-equivalent portion of your self-employment tax (approx. 50% – 57%). This deduction only affects your income tax. Contact an accountant or tax professional to see if you’re eligible for the self-employment tax deduction.

2. Health Insurance Premiums

Since freelancers have to provide their own health insurance, self-employed individuals can often deduct their health insurance premiums. The deduction cannot exceed your annual earned income.

3. Home Office Deduction

If you have a designated space in your home that is used exclusively for your business, you may be eligible for the home office deduction. You can use the simplified method and claim $5 per square foot, or you can use the complex method and write off direct expenses related to your office, including furniture, maintenance, equipment, and a portion of your utilities. Contact your accountant to see if you are eligible and to determine the best way to claim your home office deduction.

4. Office Supplies

Do you use printer ink or buy stamps to run your business? There’s a deduction for that!

Freelancers (and small businesses) can deduct office supplies so long as they are “ordinary and necessary” (which is the IRS’s rule of thumb for all deductions). Be sure to save all of your receipts so you can file your taxes properly at the end of the year.

5. Travel

As a freelancer, you can deduct travel expenses so long as the travel is strictly business-related. Again, be sure to save your receipts, airline tickets confirmations, etc.

6. Mileage

If you’re self-employed, you can deduct business-related mileage. The 2018 mileage rate is 54.5 cents per mile, which adds up surprisingly quickly.

Carefully log your start and end mileage, your starting point, your destination, and the purpose of the trip in a notebook (or using a tax software program like QuickBooks Self-Employed). You can also choose to deduct vehicle expenses instead of mileage. Talk to your accountant about which option is best for you.

7. Hardware & Software

If you require specific hardware and software to run your business, these purchases can count as deductions. Talk to your accountant about the best way to deduct these expenses as some bigger purchase may need to be depreciated.

8. Education 

Certain educational or certification expenses can also be deducted so long as they are directly related to your current line of work, not a new career. Keep track of your tuition and other education expenses throughout the year to claim this deduction.

9. Retirement Contributions

Since self-employed individuals are responsible for their own retirement accounts, retirement contributions can also be deductible. Keep track of any contributions you make to your SEP or IRA plans throughout the year to take advantage of this deduction.

10. Advertising & Marketing

Advertising and marketing expenses used to expand your business and bring in new customers can also be deducted.

New Tax Laws May Equal Savings

Top Deductions for Freelancers

The new Tax Cuts and Jobs Act was one of the biggest changes to tax law in decades. While the IRS is still rolling out the full implications of these changes, one of the most important changes for freelancers is the new 20% qualified business income deduction, otherwise known as the pass-through credit.

Certain types of businesses — like sole proprietors, S corporations, and partnerships — are eligible for an up to 20% deduction on taxable income. There is an income limit for this deduction, so be sure to talk to an accountant or tax professional to see if you qualify.

Start Saving!

 

Now that you know about the top ten freelance tax deductions, it’s time to start saving! (Saving receipts, that is.) Make sure to carefully preserve all expense receipts and keep detailed financial records of anything you plan on deducting. This assists your accountant to maximize your deductions and helps prevent a tax audit.

You can now rest easy knowing exactly what’s expected of you as a freelancer when it comes to filing taxes. You can also be confident about the best ways to save money on your freelance taxes so you can continue to do what you love — and get paid for it.

As always, we recommend consulting an accountant or tax professional for the best tax advice.

The post Top 10 Tax Deductions For Freelancers appeared first on Merchant Maverick.

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The Best Mobile Credit Card Readers For iPhone and iPad

If you’re in the market for a mobile card reader and a credit card processing app, there’s no shortage of options. The trick is finding the right option for a given business. One of the big factors that determine which apps are suitable is what kind of smartphone or tablet you have. Fortunately, if you have an iOS device — that is, an iPhone or an iPad — you have plenty of options.

Our Top Picks For iOS-Based Credit Card Readers & Mobile Apps

The first decision when choosing a card reader and mobile processing app is selecting the device itself. For the most part, iOS-compatible mobile apps and readers support iPhones and iPads alike with no major issues. But after you’ve narrowed down the list of apps based on supported devices, you’ve still got several other factors to consider — transaction costs, monthly fees, essential features, whether you want a standalone mobile app or something that supports invoicing and online payments… and that’s just to get the list started! The cost of the card reader and accepted payment methods are just as important as app features when you’re dealing with mobile processing.

So without further ado, here’s a list of our favorite card swipers and mobile apps for iPhones and iPads, as well as why we like them.

App Name Square Shopify Lite Payment Depot Mobile Fattmerchant Mobile

Payment Depot merchant services review

Review

Visit Site

Review

Visit Site

Review

Visit Site

Review

Visit Site

In-Person Transaction Fees

2.75%

2.7%

2.6% + $0.10

Interchange + $0.15

Monthly Fee

$0

$9

$10

$99

Monthly Minimum

$0

$0

$0

$0

Type of Processor

Third-Party

Third-Party

Merchant Account

Merchant Account

Account Stability

Good

Good

Excellent

Excellent

Card Readers

Free magstripe reader (Contactless + Chip Reader $49)

Free Chip & Swipe Reader (retail price $29)

Free Swift B200 reader (chip and swipe)

BBPOS Chipper BT (chip and swipe, $75; swipe, chip and contactless, $100)

Payment Depot (Swipe Simple)

Payment Depot (read our review) offers a subscription-based pricing model for its merchant accounts, with a host of software options for businesses to choose from (including Clover). Standard pricing plans for Payment Depot start at $49/month, with transactions processing at interchange + $0.15. However, if you’re looking for a mobile solution that runs on an iPad or iPhone, Payment Depot offers the Swipe Simple app, and Merchant Maverick readers can get access to special pricing that’s competitive even for low-volume merchants.

With this exclusive plan, you’ll get the Swipe Simple app and payment processing at 2.6% + $0.10 per transaction, with only a $10 monthly account fee. Remember, this is a Merchant Maverick exclusive, so you’ll need to use our link in order to get the special pricing.

Swipe Simple is a very functional credit card processing app. It runs on iPhone and iPad devices, as well as Android hardware. It even comes with a demo mode so you can test out the app before you sign up, which is always nice to see. There’s limited inventory management, but you can track stock counts. There’s even an offline mode. Check out our Payment Depot Mobile/Swipe Simple review for a closer look at the software.

In addition to the app, Payment Depot offers a choice of two readers. The Swift B200, a Bluetooth-enabled reader that supports magstripe and chip card transactions, is available to merchants for free. If you’d like to add contactless payments, you can get the Swift B250 for just $25, which is a fantastic price for an all-in-one card reader.

Shopify Lite

Shopify (read our review) is mostly known for its ecommerce platform, but it has also developed a quite powerful POS app that integrates with its online shopping tools. Shopify POS is included for free in all standard Shopify ecommerce plans, but if you don’t plan to sell online or only need some very basic online sales tools, there’s another option: Shopify Lite (read our review), which lets you create “buy” buttons and run a Facebook store for online sales, as well as giving access to the Shopify POS.

Shopify Lite will run you $9/month and 2.7% per transaction, which is a reasonable cost. The POS app runs on both Android and iOS, but an iPad offers the best user experience and access to the most features. However, keep in mind that the Lite plan is still limited even with an iPad; specifically, there’s no support for a cash drawer, barcode scanner, or receipt printer. That feature is only accessible with the Shopify Basic plan, which costs $29/month and includes a full web store with unlimited products.

Shopify also offers a free Chip & Swipe Reader for its merchants. It retails for $29 normally, which is still a great price for a Bluetooth-enabled chip card reader. We’ve reviewed the Shopify Chip & Swipe reader already, and you can check that out for a closer look.

Square

Square’s mobile point-of-sale app, simply called Square Point of Sale, gets a lot of love, and rightfully so. The app is free to use and you only pay a per-transaction fee of 2.75%. Square’s pricing makes it very attractive for low-volume and startup businesses, and there is an assortment of hardware options available. The Square Point of Sale app supports both iOS and Android devices, but certain features are not universally supported. An iPad gives you access to the vast majority of these features, but the iPhone supports all of the core features and many of the secondary, non-universal features. Check out our in-depth Square POS review for a comprehensive look at the free POS app and its features. For a closer look at the rest of Square’s products, check out our complete Square review.

As far as hardware goes, let’s start with the basics. Square has been offering a free basic magstripe reader for a long time, and it still does. (Note: you can also get the Square reader in some retail stores for $10.) However, the removal of the 3.5mm headphone jack from newer iPhone models has complicated matters somewhat. Square responded by rolling out a Lightning port magstripe reader. When you sign up for your free Square account, you can choose which model of reader you need. Square no longer offers multiple free readers; after the first one, you’ll pay $10 per reader.

However, it’s important to also consider accepting EMV chip cards, especially if you’re doing a consistent volume of business or large transactions. Square’s Contactless + Chip Reader supports both EMV and contactless NFC payments. It includes a separate magstripe reader for swipe transactions.

The Contactless + Chip Reader sells for $49, but Square does offer financing for hardware purchases that cost at least $49 (convenient, isn’t it?). You can also purchase cash drawers, receipt printers, and even tablet stands directly from Square.

Want to know more about Square’s hardware? Check out A Guide to Square Credit Card Readers & POS Bundles for an in-depth look at your options.

Fattmerchant Mobile

Fattmerchant Mobile isn’t an option that I talk about a lot, mostly because it’s best targeted at high-volume businesses. However, until recently, it was an iOS-exclusive, and even now, the iOS platform is more robust than its Android counterpart. Fattmerchant (read our review) offers customers their own merchant accounts, which translates to a high degree of account stability. Its Omni platform, which includes the mobile processing app, invoicing, and a customer database and inventory management, combines many core features in a single platform. Check out our Fattmerchant Mobile review for a more comprehensive look at the app and its features.

Fattmerchant operates on a subscription pricing model, with a monthly fee that starts at $99/month. Mobile and invoice transactions cost interchange fees + $0.15 per transactions — there’s no percentage markup at all. However, if you opt for the mobile credit card carder, you’ll get the card-present rate of interchange fees + $0.08 per transaction. You can simply key in all the transactions if you prefer — just know that you’ll pay higher interchange fees in addition to the $0.15 markup.

Fattmerchant offers a choice of two different card readers, the BBPOS Chipper BT and the BBPOS Chipper X2 BT. The Chipper BT model supports both magstripe and chip card transactions and connects to your device via Bluetooth. It goes for $75. The Chipper X2 adds contactless payment support to the magstripe and chip card readers and also connects via Bluetooth. It goes for $100.

Honorable Mentions

While I have no qualms with saying the four options I’ve presented are the best of the best, there are a couple of other mobile apps and card readers that are good options for iPhone and iPad users. So let’s talk about them!

PayPal Here

PayPal Here integrates with the rest of PayPal’s services so that you can sell online and in person seamlessly, much like Square. While it doesn’t offer quite as many features as Square, it’s still a very functional mobile app. Check out our PayPal Here review for a closer look at all the features.

PayPal Here processes payments at 2.7% per transaction, with keyed entry at 3.5% + $0.15. PayPal no longer offers a free card reader. Instead, you’ll need to shell out $15 to get its magstripe reader. PayPal will also place limits on your account if you opt for the magstripe reader, making it viable mostly for very low-volume businesses. As an alternative, PayPal offers two Bluetooth enabled cardreaders, starting with the Chip and Swipe reader, for $24.99.

If you also want contactless support, PayPal’s Chip and Tap Reader (retail price $59.99; bundle with stand $79.99). However, there’s another option for iPad users who want a more robust software option: Vend (read our review) with a PayPal integration. You’ll get PayPal’s 2.7% rate for payment processing with no monthly fee from PayPal. Of course, you’ll have to choose your Vend plan as well — and get the appropriate hardware. You’ll need the PayPal Chip Card Reader, which goes for $99.

PayPal + Vend POS
Advanced POS software
Easy credit card processing integration
Get Started For $0

SumUp

SumUp (read our review) isn’t quite as complex or feature-laden as some of the other options on this list, but if you just need an iPad or iPhone credit card reader and app, SumUp will get the job done. Payments process at 2.65%, and there’s no monthly fee to use the software. For a better idea of how SumUp stacks up against the competition, I suggest checking out our Square vs SumUp comparison.

SumUp’s cardreader, at $69, is definitely a little expensive, but it’s a beautifully designed piece of hardware. It’s Bluetooth enabled and supports magstripe, chip card, and contactless payments. You can also occasionally catch it on sale for a reduced price. I suggest checking out our SumUp unboxing review for a closer look at the reader.

Which iPhone/iPad Credit Card Swiper Is Right For You?

In payment processing, especially mobile processing, it’s impossible to take a one-size-fits-all approach, so it’s really important that you, the business owner, spend some time figuring out what features you need in a credit card processing app. You should also consider what kind of pricing model works best for your business, and do the math to see what you’d really pay with each option on your short list. And of course, there’s the card swiper, too. While a free magstripe reader might be enticing, you should really consider upgrading to a chip card-capable reader to protect your business.

App Name Square Shopify Lite Payment Depot Mobile Fattmerchant Mobile

Payment Depot merchant services review

Review

Visit Site

Review

Visit Site

Review

Visit Site

Review

Visit Site

In-Person Transaction Fees

2.75%

2.7%

2.6% + $0.10

Interchange + $0.15

Monthly Fee

$0

$9

$10

$99

Monthly Minimum

$0

$0

$0

$0

Type of Processor

Third-Party

Third-Party

Merchant Account

Merchant Account

Account Stability

Good

Good

Excellent

Excellent

Card Readers

Free magstripe reader (Contactless + Chip Reader $49)

Free Chip & Swipe Reader (retail price $29)

Free Swift B200 reader (chip and swipe)

BBPOS Chipper BT (chip and swipe, $75; swipe, chip and contactless, $100)

The takeaway is that there is no shortage of great credit card processing apps for iPhone and iPad users! And you’ll get a great assortment of credit card readers to go with. Don’t forget to check out our companion article, The Best Credit Card Reader Apps to Android.

Thanks for reading! What’s your favorite credit card processing app and mobile card reader for iOS devices?

The post The Best Mobile Credit Card Readers For iPhone and iPad appeared first on Merchant Maverick.

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The Complete Guide To Stripe Pricing And Costs

Are you curious about what makes Stripe different than other third-party processors like Square and PayPal? And if the costs are comparable? Come along as we explore Stripe — a lesser-known payment processing option that has definite potential when it comes to eCommerce.

Even though Stripe has less name recognition than competitors Square and PayPal, Stripe has likely processed many of your recent online shopping transactions without you even realizing it. That’s because Stripe powers payment processing behind the scenes for some of the biggest retail chains around — places like Target, Lyft, Facebook, Adidas, and Under Armour. Yes, Stripe has one of the most respected and well-trusted platforms in the world, but instead of providing branded, customer-facing tools like its peers, it focuses on delivering developer-friendly solutions with extensive code libraries and lots of customization options.

If you are looking for a ready-made, polished solution for eCommerce payment processing, Stripe may not be the ideal choice. A solution like Square may be much better suited to your needs. If, however, you want to build your payment processing platform from the ground up (and have the technical resources to do so), you’ll find a range of robust, world-class developer tools.

In this post, we’ll talk about what kind of payment processing Stripe provides (and why it matters), and then dive into costs associated with transactions and/or other handy tools you may need.

Overview Of Stripe

Stripe is a third-party payment processor — just like PayPal and Square. Traditional merchant account providers vet and approve each individual merchant, creating a single account for that business. Third-party processors, on the other hand, make it much easier for a business to quickly access payment processing services because they combine many business accounts together into one giant account. Stripe’s processing model relies on maintaining account volume to reduce risk for the group as a whole; for that reason, it can become a bit of a numbers game for them to remain profitable. If something looks fishy, they are more likely to terminate, freeze, or put an account hold on a business without a lot of warning.

Now, most of us feel a bit squirmy when we imagine our hard-earned revenue potentially held ransom in a purgatory account, but the truth is, freezes and holds happen only to a tiny percentage of businesses — and typically only after certain red flags have been raised. If you want to learn more about how to avoid waving some of these red flags, check out our post: How to Avoid Merchant Account Holds, Freezes, and Terminations. The majority of business owners will not have to worry about a freeze or hold, so it’s important to keep that whole issue in perspective.

Now back to the good news. Stripe has a lot of features and benefits for a growing small business, such as:

  • Transparent pricing
  • No monthly or termination fee
  • Payment security using advanced machine learning  
  • Libraries in every language
  • Display multiple currencies (add 1% for automatic conversion)
  • Versioned API changes
  • Test-friendly environment
  • 24/7 live chat and phone support
  • iOS and Android dashboard apps

And when it comes to creating the finished solution, you don’t have to do it all. There is a workaround for those of us who may not have all of the coding skills (or time!) to build it all from the ground up. Stripe has established platform partners to integrate a range of small business tools from accounting, automation, form building, CRM, inventory management, and booking — just to scratch the surface.

One thing we like about Stripe is that, unlike some companies, Stripe offers support for safe and PCI compliant migration of credit card data whether you are coming or going. Some third-party processors don’t support exit migration at all, so this is a nice touch.

Now that you are a bit more familiar with this platform, let’s check out the costs associated with processing payments.

Stripe Payment Processing Costs

Most savvy business owners want to cut to the chase. “Great, so how much does it cost?”

Stripe’s payment processing costs are straightforward, but your per-transaction costs will largely depend on the type of transaction you’re processing. Discounts and some pricing differences apply, so stick with me as we go through some different scenarios.

Online Transactions

For any eCommerce transaction (including in-app and mobile web payments), you are going to pay 2.9% + $0.30 per successful card charge. It doesn’t matter whether you process Visa, MasterCard, American Express, JCB, etc. — all cards cost the same to process. You also pay the same price whether you build your own site or connect to a third-party shopping cart.

Another great thing about Stripe is that you can accept international cards (for an additional 1%). If you need to convert the currency, however, you’ll have to pay another 1% on top of that. This is great for businesses that sell internationally, especially combined with Stripe’s ability to present prices in the customer’s local currency. 

Stripe also allows merchants to accept more than just credit cards, providing the tools that allow you to manage ACH and other payment options. Here is what it’s going to cost you:

  • ACH Credit: Starting at $1.00 per ACH credit payment
  • ACH Direct Debit: 0.8% per transaction, capped at $5
  • Wire: $8.00 per wire payment

Stripe also allows you to verify your customers’ bank accounts at no extra charge. That’s a nice touch. However, if payment doesn’t go through, you are looking at $4 for failed ACH direct deposit payments and $15 for disputed ACH direct debit payments.

In-Person Transactions

 

Stripe POS

Want the same customization for your pop-up shop or brick-and-mortar store that Stripe brings to your online presence? Introducing the Stripe Terminal!

For in-person payment processing with the Square terminal, you’ll pay 2.7% + $0.05 for each successful card transaction. But before you get too excited, Stripe Terminal’s programmable point of sale is currently in beta and available upon invitation only. You can request approval now, and if you are approved, you can buy a developer kit to run in test mode until they begin supporting transactions in live mode (this is expected to roll out very soon).

When it comes time to choose your reader, you can integrate with the Stripe Terminal through a combination of an iOS SDK and mobile reader or a JavaScript SDK and countertop reader. Stripe suggests the latter if you’re looking for a fully branded experience and have a strong developer proficiency.

Payment Security Note: As far as payment security and PCI-DSS compliance go, the Stripe Terminal is EMV Levels 1,2, and 3 pre-certified. So it can help a wide range of businesses get started without having to dedicate extra resources to payment security. But for now, you’ll have to wait to process live payments until it graduates from beta testing.

Does Stripe Offer Alternative Pricing?

QuickBooks For Nonprofits

We do get a lot of comments about the fact that Stripe (and other third-party processors) can be expensive for some businesses. Fortunately, Stripe does offer volume-based discounts for large businesses. In addition, you may be able to qualify for custom pricing if you run a nonprofit or have a unique business model. Stripe doesn’t give any hard and fast details about alternative pricing, however, so you’ll have to contact the sales team and discuss your business model with them directly.

Does your business process very small transactions ($10 or less) on a regular basis? The $0.30 per-transaction fee might be prohibitively expensive, and an alternate payment model catering to these microtransactions can save you money. Here’s what Stripe says about support for microtransaction payment processing:

Microtransaction support varies from market to market. If you process more than $100,000 per month or have a unique business model such as marketplaces, microtransactions, or unusually large order values, reach out to us, and we can discuss availability and options. In markets where microtransactions aren’t available, a common approach is to batch together multiple transactions from the same customer and submit them as a single, larger charge.

Stripe Pricing For Other Tools

Stipe offers a healthy selection of additional tools and add-ons. Below, we break them down for you and include information about pricing to help you make an informed decision.

Billing

Stripe Billing offers recurring payments and subscription tools built around the customer experience. For the recurring business model, you will have a lot of tools to help you engage customers and reduce turnover (more on that below). And as far as billing your customers with one-off invoices or setting them up for automatic recurring payments, there are no limits on how many invoices you can send, ever.

To be clear, all Stripe Billing fees are charged in addition to the processing fee (2.9% + $0.30 per successful charge).

If you’re only expecting to process a small volume of recurring payments, or you’re new to Stripe, the Starter Plan has everything you need. Your cost for using the Billing tools is 0% for the first $1 million of recurring charges, and then 0.4% after that. Stripe doesn’t charge anything extra for one-off invoices. 

For businesses that are billing at large volumes and want advanced features to manage billing from order cash, Stripe offers the Scale plan. You will pay 0.7% on recurring charges, in addition to the payment fees of 2.9% + 30 cents per successful charge to a card. However, Stripe also offers discounted ACH to businesses on the Scale plan, so there are potential cost savings.

Here is a screenshot from Stripe’s comparison of their Starter and Scale packages:

Stripe

The above is a long list of out-of-the-box tools you can put to use pretty quickly. Even just the business analytics, reporting, recovery tools, and webhooks make a compelling case of high value to cost ratio. Stripe touts that its recovery tools have “reduced payment declines for users by 45% on average and increased revenue by 10% on average.”

All-in-all, any SaaS or subscription-based business could benefit from the features in Stripe Billing — and Stripe offers a free trial with no setup or fixed monthly fees, so there doesn’t seem to be a downside to trying it out.

Connect

Connect is “the payments platform for platforms.” If you are a marketplace or a platform, you can utilize Stripe Connect to accept money and pay third parties. Connect is API-first, meaning you have the freedom to design a unique experience including onboarding, set payout timing, and integrated financial reporting, to name a few.

Connect has three account options including Standard, Express, and Custom. The cost for Connect Standard is included with Stripe — you have no additional platform-specific fees to add payments to your platform. Additionally, you’ll get a full Stripe Dashboard, dynamic risk-based KYC/AML checks, international support in over 25 countries, and hosted onboarding and verification.

Custom and Express Connect costs $2 per active account per month + 0.25% of account volume. With these accounts you can do things like build branded onboarding flows, control payout timing and funds flow, automate 1099 tax form generation and delivery, and have a platform management dashboard. The difference between Express and Custom is revealed in the names themselves. Express is a faster option requiring low integration effort to onboard recipients quickly and at scale (e.g., an on-demand marketplace), while Custom is an option for platforms to completely customize the user experience.

International connected accounts will run an extra 0.25% cross-border charge on monthly account volume. Additional fees also apply if you utilize Connect tools such as account debits (1.5%) and payouts ($0.25 per payout). However, as with Stripe’s other pricing models, the company is always up for discussing volume pricing for large platforms and alternative pricing options for low volume accounts. And if you’re a startup affiliated with Stripe Atlas Network, you can contact Stripe to learn about their custom startup package.

Stripe Connect

Sigma

Sigma connects you to your business data with a wide range of applications from business operations to finance, data analysis, and product management. Sigma doesn’t require any setup or ETLs; all you need to do is write SQL queries to create the custom reports on your dashboard. Pricing for Sigma is based on how many charges, authorizations, and application fees your business processed in the previous month. Fees start at $0.02/charge for 1-500 charges and incrementally decrease with charge volume.  

Radar For Teams

While all of Stripe’s payment processing software is fully PCI compliant and therefore meets global payment security standards, Radar is available as well. Radar bolsters your defenses through advanced machine learning. Radar learns from “hundreds of billions of data points across the Stripe network to help millions of businesses fight fraud.”

Radar is included with your standard and custom pricing plans. However, Radar for Fraud Teams is also available for an additional cost of $0.02/per transaction. Radar utilizes data and tools that support the detection and blocking of fraud, and it can decrease the false positives that block legitimate customers, too. Stripe has done a very good job at creating layers of security and data insights into their product — and you don’t need to dig into the code to make use of it because it all happens at your dashboard!

Is Stripe A Good Fit For You?

It’s pretty clear that Stripe goes far beyond your run-of-the-mill payment processing solution. The real meat of Stripe is its rich developer tools that give you the power to customize everything about the payment experience while giving you deep insights and analytical data you can use right away.

Businesses that want a fully branded, ready-to-scale solution — as well as subscription-based businesses, marketplaces, and tech-focused companies — will likely find all the tools they need and then some. However, for the eCommerce business that simply needs a reliable and secure payment processor, Stripe may be overkill. If you don’t have the technical expertise or don’t have developers on staff, you may never tap into Stripe’s potential. An option like Square may be a better fit. Square offers fast setup, no recurring fees, and up-front pricing that suits most small businesses nicely. Additionally, Square provides an extensive dashboard that reveals basic business and financial analytics with no integration required.

Not sure what you need? Check out our Stripe vs Square comparison or read our Stripe Review for an in-depth analysis. Or if you want to explore your options even further, check out How to Choose an eCommerce Merchant Account.

The post The Complete Guide To Stripe Pricing And Costs appeared first on Merchant Maverick.

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How Much Does Business Insurance Cost?

How Much Does Business Insurance Cost?

Somewhere in that endless list of things-to-do and boxes to check, a small business owner needs to think about business insurance.

It might be easier to convince yourself that you’ll figure out insurance later or that maybe you won’t need it, but all businesses have risks and make mistakes. Business insurance should be a priority.

A quick search for business insurance on the internet might, however, create more questions than answers. What kind of insurance do you need, anyway? What is a reasonable amount to pay for coverage, and what is the average business similar to yours paying? Can you save money by buying different kinds of coverage from the same company?

It’s normal to feel overwhelmed about how much things will cost, but since business insurance is a must (and possibly even a legal requirement) for your small business, we will breakdown how much you can expect to spend to protect the business you love.

How Much Does Business Insurance Cost?

“So, how much will all this cost me?”

There is no pat answer that tells business owners how much they might spend to fully cover their business. The factors and choices can seem endless. Are you buying a business owner’s policy or opting only for worker’s compensation? Do you have a risky endeavor that might need a high ceiling on your general liability and professional liability? Would adding umbrella insurance help you sleep at night? What do you actually need and what is simply a scare-tactic up-sale from an industry that peddles you worst-case-scenarios?

In general, a larger business with more options for risk will end up paying more than a sole proprietor, but that doesn’t mean that insuring your business has to break your budget, either.

Average Cost of Business Insurance

merchant cash advance industry

According to Insureon, an insurance provider that specializes in commercial businesses, the average cost for business insurance among their customers in 2017 was $1,281 per year and the median cost was $584. (In this case, nearly 60% of the businesses inventoried only had one employee: the owner!)

However, with a plethora of individual factors involved, the pricing scale differs widely between businesses, their needs, their risks, and how much they will cost to insure. An automotive insurance adjuster takes everything about a driver and his/her car into account before calculating the cost to the insurance company, and business insurance operates the same way. If you’re a reckless driver with some tickets under your belt, that price tag for insurance is going to increase. If you’re running a risky business (resisting…Tom….Cruise…joke), expect the same.

A sole proprietor looking for a single general liability policy with a million dollars in coverage might only pay as little as $30 a month.

How Business Insurance Costs Are Calculated

If we take the time to peek behind the curtain and examine how costs are calculated, it can demystify the process and give business owners an idea of what to expect before they get a quote from their insurance company.

First, think about your small business and your industry’s potential risks and liabilities. How much risk is involved with all the facets of your business? Riskier, larger, and more profitable companies will require more comprehensive protection and will therefore pay more.

Your own insurance calculations will be completed by an actuary from an insurance company who will explore your space, your product, your financial numbers, and assess your own particular risk and loss. (Are you a paper company located within a high forest fire hazard zone? A glass company on an earthquake fault line? A pool builder in the middle of a drought? Okay, okay, you get the idea.)

After the actuary looks at the risk and loss, the size and revenue from your company will factor into the ultimate decision. When you ask for a quote, you will need to provide the actuary an ample amount of data with all your business numbers (square footage of space, payroll details, etc.), so arrive prepared.

Business Insurance Cost Factors

When the actuary (someone whose sole job is to manage risk and assess risk) arrives from the insurance company to sit down and plug all your risks, losses, and opportunities for income into the calculator, many factors can ultimately impact that final number. Knowing which factors might affect cost could help you plan ahead.

  • Your Business Size: What is the physical square footage of your business? What kind of space does it require? The larger the space, the larger the quote.
  • Location, Location, Location: Location is a key factor for multiple reasons. First, where you are located will affect your premiums because some states are more accommodating than others. Are you located in a state that is considered small business friendly or lawsuit friendly? Location also factors into other business risks like flooding, crime, and foot traffic. (More water, more thieves, more people in your storefront? More money.)
  • Business Sales Reports: How much money do you make? It’s pretty simple. The more money you make, the more insurance you’ll need. An actuary will look at your numbers and see how much you — or they — might stand to lose.
  • Your Business Industry: Offices require less capital to insure than, say, a traveling circus. Some industries are built with inherently more risk than others, and the insurance company will examine all the ins and outs of how your business operates to know the best ways to protect you.
  • Number Of Employees: More employees, more insurance. (Are we sensing a theme?)
  • Claim History: As with any insurer, the actuary will also look at your past business history and see if you have made any claims in the past.
  • Types Of Policies: The bigger your business, the bigger the policy. If you don’t have any employees and can stick with general liability, you will pay pennies next to a business that is working to protect employee incomes.

Ways To Save On Business Insurance

So, you want to protect your business but you don’t want to spend more than you need to? Maybe you can’t change where your business is located or your claim history, but here some tips on how to save on business insurance:

1. Bundle Policies

Bundling your insurance policies will often save you money. Consider a business owner’s policy which combines both general liability and commercial property insurance.

2. Shop Around

Insurance companies are in the business of sales and that lowest quote may not always be the best deal in the long run if the company can’t follow-through when you submit a claim. Your business is important enough to do the research. Five independent agencies (including Standard, Poor, and AM Best) rate the financial strength of an insurance company and you can use their services for free if you sign up for an account.

3. Choose A Higher Deductible

A deductible is the amount of money you will pay before your insurance kicks in. Choose a higher deductible and your premiums will go down.

4. Group Rates

Group rates might be available for your industry! If so, this route could save you the big bucks and possibly get you better coverage

5. Work With An Agent Who Specializes In Business

Go out and find an expert on small business insurance instead of settling for an agent who might not know the specifics of your industry.

6. Pay Your Premium In Full

It may be cheaper to pay your premiums for the year in one lump sum rather than spread them out in 12 monthly installments.

Where to Buy Business Insurance

According to Insureon, only 1 in 4 small businesses has adequate insurance and 80% of small businesses never recover after a disaster. Clearly, you need to protect your business, but where should you start?

All the major insurance companies carry commercial business insurance packages. So, places like Allstate, Farmers, Nationwide, and Chubb all offer competitive rates. Some companies, like Hartford and Hiscox, which specialize in small business insurance, have online quotes that walk a business owner through the process of optimizing their rate.

Again, it’s smart to check with the Better Business Bureau or your state’s department of insurance to examine the viability and strength of your insurer. Use the rating agencies and talk with business owners in your area. Ask around and shop around: this is your business baby and should the worst-case-scenario befall your company, you don’t want to end up in the 80% of businesses who have to close their doors after a disaster.

Comparing Business Insurance Quotes

Pre-internet days, a business owner might need to make an appointment with several insurance retailers and sit through long sales pitches before receiving a quote. Now, it’s easy to get an online quote from an insurance company in minutes over the internet. That isn’t to say that scheduling a face-to-face meeting with your top three insurers is a bad idea. Once you’ve narrowed down choices, talking to a real human being could help you make a final decision on what insurance company you trust the most.

Not all business insurance plans are created equally, so here are some things to consider as you compare:

  • Don’t just fixate on the premium number, but also look at the rate. As your company grows, the rate may increase as well and price you out of your own policy.
  • Cheaper isn’t always better. Carefully weigh the cost with the level of coverage you need and don’t skimp on the coverage you need just to pay less.
  • No insurance plan covers everything, so discuss and address exclusions to the policy to make sure there are no surprises.

Several websites also can do the initial aggregate work for you and compare all the major retail policies in one place. Check Bizinsure, Coverhound, and Insureon and have your company numbers ready to go (number of employees, sales data, business address, and square footage). You can grab comparison quotes from these websites in a matter of minutes.

After you’ve carefully researched and compared all of your options, pick the best one suited for your business. Consult an insurance professional for advice. Once you’ve found the right business insurance you can rest easy knowing that you got your business the coverage it needs — and without breaking the bank.

The post How Much Does Business Insurance Cost? appeared first on Merchant Maverick.

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How To Set Up A Free Square Account

Thinking about using Square to process payments for your business? Whether you are a solopreneur or a busy boss running multiple locations, you can quickly set up an account with Square with little to no fuss. Square offers several time-saving benefits for the small business owner looking to start processing payments, including no credit checks, a free magstripe reader to get you started, and a free Square POS app which enables you to start taking credit card payments right away. Not only that, but the Square dashboard offers analytics reporting, inventory management, alerts, and (with optional add-on software) even the ability to plan email marketing campaigns!

With all of these conveniences and freebies, you can expect slightly higher transaction fees than you’d get with a traditional merchant account. However, as a third-party processor, Square offers a very transparent pricing plan that starts at 2.75% per swipe dip or tap, and 3.5% + 15 cents for keyed-in transactions. You won’t be surprised with hidden fees or contracts, and you can enjoy the same processing rate for all major credit cards. Square also offers payment dispute assistance, chargeback protection, and secure, PCI compliant software — all included.

If your interest in Square is piqued, but you need a little more information before getting started, then you’ve landed on the right post! Below, we’ll take you step-by-step through the process of signing up for a new Square account. As you will see, setting up your Square account is relatively straightforward. And the best part? It’s completely free and requires no commitment on your part whatsoever.

What Do You Need To Get Started?

Before we get started, here is the main information you’ll need to set up your Square account:

  • Email address
  • Last four digits of your Social Security number (to confirm your name)
  • Home address
  • Shipping address
  • Legal name
  • Phone number
  • Bank account number to set up your direct deposit schedule

You don’t need:

  • Bank statements
  • Proof of revenue
  • Your full social security number
  • Tax documents
  • A credit check

We are going to get pretty detailed in this tutorial, but rest assured, the application itself takes less than ten minutes. Follow along with the guide below to discover how to set up and make the most of your new Square account!

How To Create A Free Square Account

First, visit Square’s sign-up page and hit the “Sign Up With Square” button.

Sign up with Square

 

The first step asks for your email address and prompts you to create a password and choose your country. You also must agree to Square’s terms, privacy policy and e-sign consent policy. We strongly suggest that as with any contract, you take the time to click on, read, and understand the details before agreeing to them.

 

Square set up account

 

The next screen is straightforward and asks if you are an individual or represent a larger business, charity, or religious organization. Enter in your business name or another title that you would like to appear on your receipts. I’m typing in “Blue Heron Content” as my business name.

Create an individual square account for business

 

Now we are getting closer to the meat — Square wants to know where you plan on processing payments. In this example, I don’t want to limit myself, so I am choosing all of the possibilities!

 

Square processes payments mobile online and square invoices

It’s important to mention that even if you don’t plan to use some of these options right away, you can still access them later at any time.

Next, Square asks what else they can help you manage. I am also going to select all of the options again to get a better idea of what Square may suggest right off the bat. I don’t personally need employee tracking for my business, but let’s see what it can do!

Now it’s time to make decisions. Because I selected that I was interested in restaurant-related products, I am offered a free 30-day trial of Square for Restaurants, one of Square’s premium iPad POS apps. (Check out our full review of Square for Restaurants for a more detailed look at pricing and features.) If you are a restaurant owner, check out some of the perks Square lists below. For this particular tutorial, though, we are going to stick with the free POS system.

Square Point of Sale and Square for Restaurants

 

Now that I have selected Square Point of Sale as my preferred POS app, I’ve made it to the “Let’s talk about you” page. This is the place to plug in the rest of your information. Note that Square is not going to perform a credit check on you or your business, they just need the last four digits of your social security number or ITIN, your legal name, street address, and phone number. They use this information to verify your identity.

I’ve finished filling in this form, so I am going to hit “continue” and see what’s next on our journey.

 

Square setup form

 

Choose A Magstripe Reader

Great news! By the time you arrive at the next screen below (3-5 seconds, give or take), Square will have successfully verified your identity. Now it’s time to select a credit card reader to accept in-person payments. For my part, while the Contactless + Chip Reader looks very enticing at $49, I am going to accept the free reader for now.

Square Reader

 

Now there’s another choice to make. Square would like to know if I would like the 3.5mm magstripe reader that is compatible with the traditional headphone jack, or the Lightning connector version for iOS devices. I’m choosing the reader that plugs into a conventional audio jack. You’ll obviously choose the option that works best for your business setup.

Compatibility Note: Square’s magstripe and chip card readers and the Square Point of Sale (POS app) are compatible with most Apple iOS and Android devices running the latest software updates. After this tutorial, check out our Square POS Review for more about system requirements, integrations, and a lot more details about Square POS.

Free Square Reader

After selecting the type of magstripe reader that fits your needs, Square will give you the options to find a retailer close to you and pick up the reader or have it mailed. Personally, I’m opting for Square to send me the reader in the mail. After entering my shipping details, I am one step closer to getting my own Square reader. Oh, and shipping is free, too! Just note that it could take up to 10 days for yours to arrive. 

Order A Square Reader

After entering my information and clicking continue, the setup process is officially complete! That was very easy. Square has already sent me an email letting me know when to expect my reader and another to confirm my email address.

It’s time to head to the new dashboard to set up the backend. 

How To Set Up Your Square Dashboard

Right away, you can see that the dashboard has a clean layout and is pretty straightforward. Since this is the first time I am visiting this new dashboard, Square is offering up these green bubbles as a setup guide. Let’s explore the dashboard and start setting up inventory, customizing the layout, and checking out the reporting features.

Square Dashboard setup

 

Compatibility Note: You’ll be able to access the full Square dashboard from any web browser, but the Square Dashboard app is only compatible with iPhones at this time. You can still take payments on any compatible iOS and Android device with the Square POS app, however.

Add Items & Build Your Inventory

From your home screen, you will see the teal Items button (pictured in the screenshot above). The place to add inventory is under Items>Item Library. To the right on the screenshot below, note the blue button that says “Create an Item”:

Adding an Item in Square Inventory

Here is what the “Create an Item” screen looks like in the Square Dashboard before adding a product:

Create an Item Screen in Square Dashboard

I went ahead and uploaded a product image and filled out my first item below. I can add the amount of stock I have, a price, and set up low-stock alerts for myself here, too! Square will even let me color-code items if I prefer to group categories by colors. 

It’s also possible to create variant items if you sell the same product in different colors and/or sizes. Plus, for cafes and restaurants, there’s a “modifier” option. Say, for example, that you want to offer coconut, soy, and almond milk alternatives for customers in your coffee shop. You can do that, and even set an upcharge fee for these items using the modifier feature. There’s also an option to specify at which locations an item is available if you have more than one shop. 

Add an Item in Square Inventory

Create & Manage Locations

You can create multiple locations from within your Square Dashboard by going to “Accounts and Settings” and then to “Business” and selecting “Locations.” Square will even let you specify a mix of physical locations with a set address and mobile locations without one.

Square’s location management features can help you manage inventory and gather data from multiple stores — and it is totally free:

  • Linked locations and deposit options
  • Per-location item libraries
  • Device management for security
  • Reporting tools to compare/contrast sales or other data

Square also offers advanced tracking and reporting tools for individual employees across your locations. More on those features and cost in the Employee Management section.

Manage Sales Tax Settings

You will find Square’s sales tax settings nestled under the Items menu in your dashboard.

When you create a tax at your Square Dashboard, the tax will automatically sync to every device in your account, and you can specify which taxes apply to which locations. You can even build the tax into the price of the item if you prefer, rather than adding the tax to the price afterward. Square also lets you modify tax settings from within the mobile POS app as well, which is useful when you need to make changes on the fly.

In addition to multiple tax rates, you can create conditional tax rules, which are preset conditions in which a tax won’t be applied — whether you need that to apply to one item or the entire order. This is especially helpful for restaurants that handle online orders.

Now, let’s head back to the home screen and customize our dashboard layout, and then check out the reporting features!

Customize Your Dashboard Layout

Customizing the layout of your Square Dashboard is super easy. First, you can get rid of anything you know you won’t need right off the bat by scrolling through and unchecking anything in the drop-down menu (pictured on the right-hand side of the screenshot below). Don’t worry about making the wrong decision, because you can reset the whole thing or click to re-check one box.

Square Dashboard Customize

The other way to easily adjust your view is by dragging and dropping the tiles to configure them exactly how you want them. For my store, I switched tiles to move the feedback tile up from the last row. This drag-and-drop feature makes it easy to get the information you prioritize first, and then scroll to other options whenever needed.

Moving Square Tiles in Dashboard

As you can see, it’s simple to move things around, and if you change your mind, just as easy to change it back.

Review Square’s Reporting Features

The extensive, user-friendly and (mostly) free reporting features are what make Square a fantastic, no-fuss choice for any small business. As you can see in the screenshot below, there is a long list of possible reports. Every business has unique needs, and Square does a good job of supporting a wide range of small businesses with various options and features.

Square reports

All of the sales reports, such as Sales Summary, Sales Trends, Items Sales, and Modifier Sales, are free. Custom Reports is another handy and entirely free reporting tool that can help you combine and compare your reporting data. Custom Reports allows you to aggregate reports with multiple filtering options. This feature makes it easy work to create a report that breaks the data down for a single location, or you can pick and choose certain pieces of data and compare them across different locations. For instance, you could create one report that compares Gross Sales and Returns for a particular device and/or location. 

To find out even more about what Square’s dashboard can offer you in terms of reporting features, check out our post Why We Like Square’s Online Dashboard and Analytics App.

If you are looking for even more robust reporting and tracking across multiple locations for your employees, it may be worth it to you to learn more about the Employee Management tools, featured below.

Manage Your Employees 

Within the Dashboard, you’ll find the Employee section, which is the foundation for Square’s Employee Management feature set. Adding a new employee into your dashboard is easy — and adding in separate email logins for Square POS is entirely free. However, if you want advanced reporting on timekeeping, individual employee sales, and sales vs. labor costs, you need to subscribe to Employee Management, which will cost you $5 per employee. 

Square Employee Reporting Tool

Here, I have chosen to select the free “Mobile Staff” option to show you that you can invite employees using the email address that they will then use to log into the Square app. You can also enable or disable permissions for accepting payments in Offline Mode and set or remove Issue Refunds permissions.

It’s important to note that employees assigned to mobile staff can only access their own sales data in the Square POS app. 

Square Employee Permissions Mobile Staff Free

If you want something a bit more substantial in terms of employee reporting, Square offers that, too.  To track individual employee sales through the day, keep better performance accountability across multiple locations, and closely monitor administrative permissions, the $5/mo per employee cost for the advanced Employee Management feature seems like a pretty fair deal. You also get timekeeping, so your employees can clock into their shifts through the Square POS app. 

If you want to get started with Employee Management, there are a few ways to do it: Head to Employee Sales or Labor vs. Sales under Reports and start adding employees. It’s free to try for 30 days!

Employee Management Sales Reporting

 

How To Set Up Square Deposits & Funding

When it’s time to get all of that revenue into your bank account, Square has several options for getting your money, all found under Deposits.

Square Instant Deposit and Deposit Schedule Tutorial

Square will automatically deposit your funds on the next business day. You can also change your ‘close of day’ to adjust for your time zone or business hours if you would like. The close of day determines when Square cuts off payment deposits for the next business day. If you need your money even faster, Square offers Instant Deposits that transfer your current Sales Balance immediately — whether it’s a business day or a weekend. This faster service will cost you 1% of the transfer amount. You can even use Scheduled Deposits to get your money deposited at each day’s close of business. 

Find out all the details about the instant deposit feature, and more about how Square’s deposit options work in general, by checking out our post, How Does Square’s Instant Deposit Work?

To set up your deposit schedule or choose an instant transfer, you’ll need to link your debit card (in addition to your bank account). However, you have yet another option for disbursement. You can request your very own Square Card, a personalized business debit card that holds your Square balance.

Square Card Small Business

You can use your card anywhere MasterCard is accepted. If you’d like to order one, you’ll find “Square Card” tucked right under the Deposits tab. To be clear, you can request a Square Card and also choose to have funds deposited into your bank account.

Explore More Square Software Options

Square offers a myriad of specialized software options to make business more productive. Here are some of your options:

  • Customer Engagement: Square’s customer engagement tools include a customer database, feedback management, and CRM software. The database and feedback tools are free, but the CRM starts at $15 month. The image above is a sample CRM campaign I could send to my lapsed customer list. Email campaigns are easy to customize and segment for those reachable-by-email customers.
  • Loyalty Program: This tool starts at $25/month. Read our Square Loyalty Program Review for an in-depth analysis.
  • Advanced Employee Management: As outlined in a previous section, pay $5/month per employee for advanced reporting and employee management tools.
  • Payroll: Square Employee and Contractor payroll starts at $29/month plus $5/employee. Contractor-Only Payroll is just $5/month per contractor.
  • eCommerce: Square offers free space and setup for an online store, and you can integrate with major shopping carts. Read our Square Online Store and eCommerce Review.
  • Invoicing: Invoices are always free to send, pay 2.9% + 30 cents per invoice when your customer pays with credit or debit online. For more on the pros and cons, pricing, and an in-depth look at invoicing with Square, check out our Square Invoices Review.

Choose Another Square Point of Sale App

While the free Square POS app will likely fit the bill for many small businesses, Square has developed more specialized tools for retail, restaurants, and appointment-based businesses.

Square For Retail:

This POS system works with an iPad and has a redesigned interface and usability geared for retail businesses that have substantial inventory. Instead of scrolling to an item in your inventory, an item is easily searchable by name. The barcode scanning and printing features make keeping up with inventory a bit easier, too. Check out our Square Retail Review for more on price, pros and cons, and all a lot more details.

Square for Restaurants:

If you are familiar with Square’s POS system, you may be surprised to see how different Square for Restaurants really is. And it has to be. Sit-down restaurants usually require more specialized tools to cover their everyday business needs, and this POS delivers — from table mapping, menu creation, table management, and reporting tools — there are a lot of specialized features here. Check out our full Square for Restaurants review to find out if this is the right choice for your restaurant.

Square Appointments:

If your business relies on creating and maintaining appointments for just yourself or an entire team, Square Appointments might be just what you need. Note that this POS option is an iOS exclusive. It’s free for individual users, and pricing starts at $50 a month beyond that. Check out our in-depth Square Appointments Review, including functionality, customization, and features.

Choose Hardware Options

Square has expanded to offer so much more than the free magstripe credit card reader. As I mentioned earlier, Square offers a Contactless + Chip reader that lets you accept chip card and contactless payments for $49, which is a smart move to improve payment security.  

If you need something more robust in terms of hardware, however, you can probably find what you need. Square offers countertop POS systems with customer-friendly displays, and if you want to toe the line between countertop vs. mobile, Square also offers a fully portable credit card terminal with a built-in receipt printer.

Square’s countertop POS devices include:

  • Square Stand: This hardware option is a tablet stand with a built-in card reader (along with contactless and chip reader) with an affordable price tag, minimal cords, and a swivel stand.
  • Square Terminal: A more portable option, Square Terminal accepts magstripe, chip card, and contactless transactions. It’s sleek design, built-in receipt printer, and generous display size make it a nice, versatile option.
  • Square Register: Need something more robust? The Square Register offers a 13.25-inch display to run your Square Point of Sale, and on the opposite side, you have a 7-inch customer display ready for magstripe, chip card, and contactless transactions.

For an in-depth look at each of the POS options or to take a gander at all the Square POS kits and bundles, head over to A Guide To Square Credit Card Readers And POS Bundles.

Where To Go Next With Square?

When you consider that Square is a secure, PCI compliant option with a transparent pricing plan and offers lots of bells and whistles, it truly is an excellent solution for any small business. I like that it’s so easy to set up an account with Square, and that they don’t ask for much in terms of personal information. When it is time to get set up or find reports, the dashboard is intuitive and easy to navigate. I also love that Square offers affordable hardware and software when it comes time to scale the business.

Not quite ready to make a decision? Check out our Square Review or head over to Square and set up your own account to see for yourself.

Already have an account? Square support provides great resources to help answer your questions as you navigate your options.

Have questions, comments? Leave us your thoughts below! (Just make sure you check our comment guidelines, first!)

The post How To Set Up A Free Square Account appeared first on Merchant Maverick.

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If you’ve arrived at our comparison of Shopify and Etsy, I’m guessing you’re an online seller (or an aspiring one) of the “artsy” or “craftsy” variety. Perhaps even “artsy-craftsy.” Whichever identifier you prefer, you’ll be pleased to know that both Shopify and Etsy can help you sell all sorts of unique, handcrafted, and/or vintage items.

I’ll admit that in some respects, it’s a little unfair to compare Shopify and Etsy head-to-head. Shopify is a shopping cart platform/website builder you can use to create and manage your own, standalone ecommerce store. The Shopify brand itself operates almost completely in the background from your shoppers’ point of view. (If you build your store correctly, no one will know that it’s really powered by Shopify.)

By contrast, Etsy is an online marketplace that allows you to set up shop directly alongside other ecommerce vendors, all with a similar artsy and/or craftsy vibe. All the while, Etsy’s involvement in the whole operation is directly front and center for your shoppers.

You could also argue that a direct comparison between Shopify and Etsy is quite fair and appropriate. People often wonder 1) which of the two software platforms provides the best starting place to sell online, 2) under what circumstances it makes sense to use one or the other (or both), and 3) at what point a seller might need to transition from Etsy to Shopify.

Plus, the introduction of Pattern by Etsy a few years ago made the comparison between Shopify and Etsy even more apropos. For a monthly fee, Pattern makes it possible for Etsy sellers to maintain a standalone, inventory-synced site of their own. Sites built with Pattern can even offer additional products and services that don’t meet the handmade/vintage/craft supply restrictions of normal Etsy shops.

Pattern aside, a huge draw of Etsy in its original form is the built-in traffic and existing customer base from which you can directly benefit as a seller. (You don’t get that with a standalone Pattern site.) The downside, of course, is that you must share your customers with similar stores.

So, with Pattern thrown in, can Etsy compete directly with Shopify? Does the magic combination of Etsy and Pattern render Shopify completely unnecessary for some Etsy-type sellers? You can already tell from our chart at the top of this article that we are still fans of Shopify, but we think all sellers should understand precisely how these two services stack up on all the important dimensions. Ultimately, the right fit is up to you.

Shopify’s eCommerce Options

Mobile POS Online Social Media
Mobile App + Free Card Reader Point of Sale Online Store Social Media Selling
Get Started Get Started Get Started Get Started
Low-cost POS for iOS and Android with free hardware All-purpose POS integrated with all sales channels Build a store or integrate with your current website Sell on Facebook and other platforms
Starts at $9/month Starts at $29/month Starts at $29/month Starts at $9/month
Free Trial Free Trial Free Trial Free Trial

Pricing

Winner: Tie

Despite some overlap, there’s no getting around the fact that Shopify and Etsy have very different pricing structures. The differences are significant enough that we can’t call a clear winner for cost.

Here’s a very generalized way to compare the two:

  • Sellers who are just getting started, are very concerned about cash-flow, and simply can’t afford a monthly subscription fee will find an initially cheaper option in Etsy.
  • Once you have a moderate and fairly predictable stream of transactions and need a full website for your store, Shopify starts to become more cost-effective.

That’s the condensed version of our pricing comparison. For the full breakdown, strap in and keep reading!

When comparing these two platforms, you should first wrap your mind around the main categories of fees involved. It will also help to keep the following overarching difference in mind: Shopify’s main charge is a monthly fee for using the service, while the main component of Etsy’s cost is a fixed 5% transaction fee charged on every sale that occurs on the platform.

Here are the different categories of costs you should keep in mind when comparing Shopify and Etsy:

  • Monthly Fee: Subscription fee for using the platform.
  • Listing Fee: Cost of listing a product (or group of products that make up one listing) in your shop.
  • Transaction Fee: Percentage commission per sale charged by Etsy or Shopify itself.
  • Payment Processing Fee: Not the same as a transaction fee! This is a per-sale fee (usually a percentage and a dollar amount) charged by your credit card processor/payment gateway. While this entity is usually a third-party company, it turns out both Etsy and Shopify have an in-house, pre-integrated option that most sellers use (Etsy Payments and Shopify Payments, respectively).
  • Standalone Website: Cost of having your own, hosted website with a customizable theme template.

Let’s take a close look at the numbers, shall we? All prices will be shown in USD.

Shopify Pricing

Shopify plans have a monthly fee, no listing fee, and a variable transaction fee that only comes into play if you do not use Shopify Payments as your credit card processor. Starting at the $29/month level, you get your own store website. This involves choosing a free Shopify template or purchasing a premium template from the Shopify theme store. As you look through Shopify’s five pricing plans, remember that you can completely avoid Shopify’s extra transaction fee if you use Shopify Payments as your credit card processor.

Shopify Lite Plan 

  • Monthly Fee: $9/mo.
  • Transaction Fee:
    • If Using Shopify Payments: None
    • If Using External Gateway: 2.0%
  • Payment Processing Fee (Online)
    • Shopify Payments: 2.9% + $0.30
    • External Gateway: Varies
  • Standalone Website: Unavailable. Sell on an existing website, Facebook, or in-person only.

Basic Shopify Plan

  • Monthly Fee: $29/mo.
  • Transaction Fee:
    • If Using Shopify Payments: None
    • If Using External Gateway: 2.0%
  • Payment Processing Fee (Online):
    • Shopify Payments: 2.9% + $0.30
    • External Gateway: Varies
  • Standalone Website: Included. Templates are $0-$180/ea.

Shopify Plan

  • Monthly Fee: $79/mo.
  • Transaction Fee:
    • If Using Shopify Payments: None
    • If Using External Gateway: 1.0%
  • Payment Processing Fee (Online):
    • Shopify Payments: 2.6% + $0.30
    • External Gateway: Varies
  • Standalone Website: Included. Templates are $0-$180/ea.

Advanced Shopify Plan

  • Monthly fee: $299/mo.
  • Transaction Fee:
    • If Using Shopify Payments: None
    • If Using External Gateway: 0.5%
  • Payment Processing Fee (Online):
    • Shopify Payments: 2.4% + $0.30
    • External Gateway: Varies
  • Standalone Website: Included. Templates are $0-$180/ea.

Shopify Plus: Custom pricing. Reserved for enterprise-level customers.

With each bump in subscription level, Shopify sellers have access to additional features, as well as more staff accounts for their stores. Check out our full Shopify review, or our quick guide to Shopify pricing, for a more complete breakdown of features by plan.

Basic Shopify Advanced

Monthly

$29.00/mo

$79.00/mo.

$299.00/mo.

Yearly

$26.10/mo.

$71.10/mo.

$269.10/mo.

2 Years

$23.20/mo.

$63.20/mo.

$239.20/mo.

3 Years

Same as above

Same as above

Same as above

Etsy Pricing

Etsy has two main plans — Standard and Plus — and a Premium plan that will launch sometime in 2019. Most Etsy sellers use the Standard plan with no monthly fee, whereas the Plus plan is $10/month. Other components of Etsy’s cost include a fixed listing fee, as well as 5% transaction fee on every sale. There is no avoiding this 5% fee, even when you use Etsy Payments as your credit card processor.

Also, keep in mind that your only web presence is your shop page within the Etsy marketplace. If you’d like your own store website separate from (but synced to) your Etsy shop, you can create and maintain a Pattern site for an additional $15/month.

Here are the plans:

Etsy Standard

  • Listing Fee: $0.20/ea.
    • Lasts 4 months
    • Charged when listing is first published or when renewed
  • Transaction Fee: 5.0%
    • Etsy’s commission per sale
    • Also charged on the shipping price
  • Payment Processing Fee w/Etsy Payments: 3% + $0.25
  • Standalone Website: None, or $15/month with Pattern. Pattern site templates are free.

Etsy Plus

  • Monthly Fee: $10/mo.
  • Other Costs Same As Above
  • Additional Features:
    • A monthly budget of credits for listings and Promoted listings ads
    • Access to a discount on a custom web address for your Etsy shop
    • Restock requests for shoppers interested in your items that have sold out
    • Advanced shop customization options
    • Access to discounts on custom packaging and promotional material like boxes, business cards, and signage

Etsy Premium

  • Launching 2019
  • Will include premium customer support and advanced management tools for businesses with employees

One final note about pricing before we sum up this section: if you want a standalone site built on Pattern, you’ll also need to purchase and/or connect a domain name. The annual cost varies, but should be comparable to purchasing a domain for a Shopify store. Of course, if you stick to just selling on Etsy and not on Pattern, you don’t need your own domain URL.

Again, this is one of those comparisons you’ll have to decide the winner of for yourself. You can see that once you have a steady flow of significantly-sized transactions, avoiding that 5% Etsy fee on every sale and ponying up $29/month for Shopify instead (and using Shopify Payments to have the Shopify transaction fee waived) starts to make more sense.

Hosting

Winner: Tie

Shopify and Etsy stores are both fully-hosted solutions based in the cloud. You don’t need to download or install anything to use either. If you create an Etsy-connected website using Pattern, your site’s hosting is covered by your $15/month Pattern subscription. Similarly, Shopify store hosting is covered by the monthly fee.

Specific Size Of Business

Winner: Shopify

Shopify deserves the win in this category for accommodating a much wider range of business sizes. For just $9/month, you can start selling on Facebook with no additional transaction fees (beyond payment processing itself) if you use Shopify Payments. From there, Shopify scales all the way up to enterprise-level merchants. Etsy, on the other hand, is better geared toward small to mid-sized operations and doesn’t scale nearly as well. That said, for those who just want to test the ecommerce waters and dabble in selling a few handmade or vintage products, Etsy is ideal.

Hardware & Software Requirements

Winner: Tie

No special hardware or software is required to open and manage a shop on either platform. You do have the option to add hardware (like card readers) if you wish to sell in-person.

Ease Of Use

Winner: Etsy

Shopify usually earns our top rating for ease of use in the ecommerce software category, and with good reason. In this case, however, I’m awarding Etsy the narrow win. As a marketplace with a uniform structure across all web shops on the platform, the whole Etsy setup process is much less open-ended, so it’s easier to start selling right away. Once you fully dive into the admin dashboard and start manipulating individual features, however, I think the two platforms are equally easy to use.

Let’s peek inside the setup process and backend structure of each system, so you can see what I mean.

Shopify Setup

Shopify offers a two-week free trial of the platform — all you need is an email address. You’re free to test the software to your heart’s content, short of making actual sales.

Shopify Dashboard

Once you’ve started a trial account, you’ll gain immediate access to your store’s admin panel. The Shopify dashboard is quite streamlined, with daily operation menus contained in the left sidebar. There are even a few tips to get started setting up your store in the center area:

Shopify — Add A Product

Listing your first product is typically one of the first tasks inside Shopify, but it doesn’t have to be. Adding a product involves completing a simple interface:

In addition to configuring products and setting up the rest of the backend of your store, you can work on customizing your online storefront at the same time. We’ll have more on this process in the Web Design section.

While Shopify is easy to use, you are ultimately responsible for locating and configuring all the settings (shipping, tax, billing, etc.) to get your store going.

Etsy Setup

The cookie-cutter look of Etsy shops is no accident — it’s achieved through a simple, highly-controlled system behind the scenes. In fact, Etsy guides your hand to such a strong extent that by the time you’re taken through the basic setup process, you already have a store that’s up and running.

Unfortunately, there is no free trial of Etsy. Instead, you must enter a product, your bank account routing number, your credit card info, and other personal/business details before you can even enter the admin dashboard. Coming from the land of ecommerce software where no-credit-card-required free trials abound, I find this system annoying. However, I can’t deny that it is also very effective.

From my personal Etsy account, I’ve used to make Etsy purchases in the past, I simply clicked “Sell on Etsy.” I was then taken through a very detailed setup wizard, all the way from setting my country, to listing my first product, to inputting my billing and payment methods. As you can see from the dots across the top of the wizard interface, it’s a five-step process:

Etsy Dashboard

When you finally make it to the main admin panel (called Store Manager), you’ll find it’s actually fairly similar to Shopify. In my own testing, I could find all the menus and features I was looking for in the left sidebar:

Etsy — Add A Product

The most detailed piece of the store setup wizard is step three: adding products (a.k.a, listings). As I mentioned, you’re forced to list at least one item before you can even complete the Etsy signup process and see your main dashboard. Below is the third screen from the setup wizard. Yep, it’s long. Click it to enlarge, if you dare.

This may seem like a lot of work, and it kind of is. Mercifully, Etsy makes it all extremely straightforward. You just need a touch of patience. As part of this process, you’re actually also setting up a shipping profile that can then be reapplied to other products. And, once you choose the type of product you’re selling, Etsy is very good about predicting the type of attributes and variations you might need for that product. I walked away from the processing thinking, “Wow, Etsy knows its sellers and their products really well.”

Side note: Once you finally make it to your dashboard, you can load additional products with a similar interface:

As soon as I was (finally) done with the initial setup wizard, my shop was online and ready to sell. I received so much guidance steering me directly to the goal that I almost felt like I was tricked into suddenly having an active store. In a good way, I guess!

I’ve focused on getting a store up and running in this section as an illustrative example — there are lots of other components of each platform to consider. As you’ll see in our Feature section below, though, Etsy has fewer features than Shopify overall. This makes it easier to quickly get a handle on the entire software platform’s capabilities and scores Etsy another point for user-friendliness. Still, the ease of going from zero to ready-to-sell is what really puts Etsy on top.

Features

Winner: Shopify

Let’s acknowledge right away that comparing the features of Etsy and Shopify is hardly an apples-to-apples endeavor. One is an online marketplace including multiple sellers, while the other is a platform on which to build a website that you ultimately own. Etsy has a specific target market of crafters, vintage resellers, and the like, while Shopify’s merchant pool is much wider. The feature sets of each platform work really well for sellers within their specific contexts. Once we add Etsy’s Pattern to the mix, the comparison gets a little closer, but it’s still slightly unfair to both systems.

I do think the best “features” of Etsy have already been highlighted — it’s very easy to get started selling, and you’ve already got a built-in traffic base. Beyond these important advantages, there’s not a lot you can do on the back or front end of your Etsy and/or Pattern shop that you can’t do with Shopify. And, if the core Shopify platform doesn’t have a specific tool you’re looking for, I can almost guarantee you’ll find a solution in the immense app store (more on that later).

All in all, I’m giving Shopify the win because I think it’s a more advanced system for ecommerce. Shopify adds several features that Etsy and Pattern are missing, like checkout on your own domain (customers are redirected back to Etsy if they purchase through your Pattern site), manual order creation, a built-in POS system, and bulk product import/export/editing. In addition, many of the features the two platforms share in common are more robust or flexible with Shopify (I’m thinking of their respective discount engines, abandoned cart recovery systems, SEO tools, etc.).

Despite their core differences, Shopify and Etsy/Pattern still have a lot of great things in common. Thus, I’d like to end this section with a list of some features both platforms share:

  • Sell unlimited products
  • Sell physical or digital products
  • Free SSL certificate (with Pattern)
  • Built-in blog (with Pattern)
  • Social media sharing
  • Automatically calculate shipping & tax
  • Purchase/print shipping labels
  • Shipping discounts
  • Inventory & order management
  • Create discounts & coupons
  • Abandoned cart recovery
  • Guest checkout
  • Analytics & reports
  • SEO tools
  • Mobile store management app

Web Design

Winner: Shopify

Shopify easily wins this category, even after you throw Etsy’s Pattern software into the mix. Shopify’s frontend template options have Pattern’s beat on all counts — the sheer number of options, the variety of styles, and the overall quality of designs. Not to mention that once you’ve chosen a theme, Shopify gives you much more flexibility to perform further customizations. Allow me to illustrate!

Shopify Design

Shopify offers 70 templates, most with 2-4 style variations. Ten themes are free and supported by Shopify developers, while the remaining third-party themes are offered at $140-$180 as one-time purchases.

I think most of the free themes from Shopify outshine Pattern themes, but we’ll get to Pattern in a moment. For now, you should know that Shopify has tools to adjust fonts and colors (via the Theme Editor), and to drag-and-drop page elements up and down your layout (via the “Sections” tool) — all without touching any code. You can also make further adjustments with code if you have those skills, but this is not necessary for the average user.

Here’s a quick screen-grab of Shopify’s visual, non-coding editor:

For more information on how these tools work, check out our full Shopify Review.

Etsy Design

Your Etsy shop comes with just one design template that’s the same as everyone else’s on the marketplace. You already saw the default store layout that popped up when I initially created my store. In the backend admin panel, you can customize your homepage by adding a banner image, your logo, a featured area to highlight products, an About section, and a few other basic elements. Each piece is fixed in place, though — no drag-and-drop tool to be found. Anywhere there is a little “+”, you can add a specific element:

With the $10/month plan, you have a bit more flexibility in your design. For example, you can insert a rotating image carousel in lieu of a fixed banner image across the top. And yet, there’s still no dragging nor dropping allowed.

If you decide to create a standalone website with the Pattern feature (remember, that’s another $15/month), you can choose from 10 possible templates. Pattern will recommend an option for your shop depending on your current Etsy store, but you can easily swap it out later:

Once you’ve chosen a theme, you have the option to customize your colors, fonts, text, and images — but again, all with pre-defined placement: Here’s the interface after I added a logo and header:

You can also add a few select pages to your site, like an About or Contact page. You just have to be okay with your layout being completely fixed for each page. Even if you wanted to try tweaking the template code, it’s just not an option.

Sorry, Etsy. Shopify has some of the best designs and editing tools of all shopping cart platforms on the market, so I’m not surprised that Etsy is completely overshadowed in this area. Pattern is only ideal for the most basic of websites. Fortunately, it does offer a 30-day free trial of a live site (once you’re already signed up for Etsy) if you’d like to test the site builder for yourself.

Integrations & Add-Ons

Winner: Shopify

Etsy and Shopify each offer a collection of free and paid add-ons to integrate with your shop. The big difference is in the quantity. Etsy’s selection of a couple dozen apps just can’t compete with Shopify’s approximately 2500 offerings. If you’re worried about the quality of these Shopify add-ons, you have access to thousands of user reviews in the app store. You’re likely to find anything and everything you need to expand your store beyond the core Shopify platform.

A large selection is certainly great, but with the important caveat that the vastness of it all could end up becoming too overwhelming, costly, and unnecessary for small sellers. I was happy to see that Etsy at least offers a few well-known accounting and tax integrations (e.g., Quickbooks, Wave, TaxJar, TaxCloud) and email marketing apps (e.g. AWeber, or MailChimp if you use Pattern). You’ll need to decide if you will ultimately need the store expansion capability that Shopify provides, or can settle for Etsy’s offerings. If you set up a Pattern store, you’ll definitely want to add a good SEO integration.

Payment Processing

Winner: Shopify

Payment processing is a complicated and nuanced topic, so we’ll just cover some basic comparisons. Your mileage on this verdict in favor of Shopify will vary depending on your location, currencies, risk level, etc.

We’ve already mentioned that Shopify and Etsy both have their own self-branded payment gateways. Do note that Shopify Payments is actually built on Stripe’s infrastructure, while Etsy Payments is largely powered by Adyen, another big payment gateway company.

At any rate, most sellers on either platform end up using these pre-integrated options. Why? Well, even though you have over 100 processor options with Shopify, recall that you’re penalized with a separate transaction fee (usually 2%) if you don’t pick Shopify Payments. Meanwhile, Etsy Payments (formerly Etsy Direct Checkout) is essentially your only credit card processor option with Etsy. The only reason you wouldn’t use Etsy Payments is if it’s not yet available in your location. If you’re not operating from one of the approximately three dozen approved countries, you can only accept PayPal or manual payment methods (like check or money order) that you arrange separately with your buyers.

Etsy Payments allows you to accept credit and debit cards, Etsy gifts cards and credit, PayPal (pre-integrated), a few bank transfer services, Apple Pay, and Google Pay. Shopify Payments offers similar options but adds Amazon Pay and Shopify Pay to the mix. Meanwhile, Etsy Payments does allow you to accept a few more currencies than Shopify Payments (Danish or Norwegian krone, anyone?).

Below is a quick look at the processing fees for Shopify Payments versus Etsy Payments (shown in USD). As you’ll see, Shopify Payments it the better processing deal, especially as you climb the subscription ladder. Of course, you need to factor this into the larger picture of costs we discussed earlier.

Shopify Payments:

  • $9 Lite Plan
    • 2.9% + $0.30 Online (including manual entry)
    • 2.7% In-Person
  • $29 Basic Plan
    • 2.9% + $0.30 Online
    • 2.7%  In-Person
  • $79 Shopify Plan
    • 2.6% + $0.30 Online
    • 2.5% In-Person
  • $299 Advanced Plan
    • 2.4% + $0.30 Online
    • 2.4% In-Person

Etsy Payments:

  • 3% + $0.25 Online
  • In-Person (with Square integration only):
    • 2.75% Swiped/dipped/NFC
    • 3.5% + $0.15 for manually-entered online transactions
    • + $0.20 for any Square product not synced with your Etsy store

An “in-house” payment processor can really streamline this aspect of your business, so it’s nice that both platforms offer one. Neither is a 100% perfect processor for everyone, as you’ll see when we discuss user reviews later. Nevertheless, Shopify Payments comes out ahead because it offers better rates, more payment methods for shoppers, and a native system for in-person transactions. Plus, if Shopify Payments doesn’t work for you, you’ve got plenty of other gateways from which to choose. Not so with Etsy.

Customer Service & Technical Support

Winner: Shopify

This particular contest was closer than I expected. Both platforms offer 24/7 email and phone support, but Shopify adds a third contact channel via 24/7 live chat. That’s really the main reason for Shopify’s win here. I know a lot of online sellers prefer this option over email and phone, since it works like a nice blend of the two. Etsy does offer a callback option when waiting on hold, which is very handy. On the flip side, I’d like to see Etsy’s contact number and ticket system more easily accessed from the help center page — it’s much too buried for my taste at the moment.

While both platforms also offer great self-help resources such as blogs, forums, knowledgebase articles, and videos, the information for Etsy sellers is mixed in with support resources for Etsy shoppers. This can feel a bit cluttered and confusing at times.

I will say that Etsy does go beyond the support of a typical ecommerce platform in a unique and specific way. As a marketplace that gathers lots of merchants together in one place, sellers are automatically part of a built-in community. There’s even an opportunity to join Etsy Teams — groups of sellers in the same location, selling the same types of products, or with other unifying aspects to their stores. Some teams even meet up in real life or organize special events together. While Shopify users can tap into the strong community of developers and merchants offering mutual support in forums, the overall camaraderie can’t compete with Etsy’s community vibe.

You also may have more access to seller protections as part of a marketplace, but this can heavily depend on the specific situation. Etsy aims to look out for its shoppers as well!

User Reviews

Winner: Tie

Because Etsy is a marketplace full of buyers as well as sellers, buyer complaints abound. When something goes wrong with a sale, it’s more accessible and more public for a shopper to point a finger at Etsy than the actual seller, even when the seller was primarily at fault. Shopify mostly operates behind the scenes from a shopper’s point of view, so it’s easier to isolate feedback about the platform that’s specifically from store owners.

For these reasons, Etsy’s reputation on review sites can be skewed quite negatively, so I can’t make a truly fair comparison with Shopify. Nevertheless, I’ve teased out some seller-specific feedback, just so you can get an idea of the common threads that appear.

First, the good. Not surprisingly, Etsy sellers like how easy it is to set up shop. They enjoy access to an existing customer base and the effective site search tools that make it easy for shoppers to find their products. Some users have mentioned their positive experiences with Etsy’s customer service, and the help they’ve received resolving disputes with customers (or even other sellers).

Of course, some Etsy sellers mention bad experiences with customer service, saying the marketplace isn’t taking enough responsibility for regulating seller behavior. I found several complaints that Etsy gets away with being a “neutral” party, shifting blame to its users on either end of transactions. At the very least, people are confused about Etsy’s role.

Other Etsy shop owners contend that the marketplace is too saturated with similar sellers, and that competition is simply too tough to sustain their shops. Still others have issues with payments or chargebacks or claim their shops were suddenly closed without warning. I’ve also seen plenty of sellers lament the increase in Etsy transaction fee from 3.5% to 5% in mid-2018 — that wasn’t so popular.

On the Shopify side, the top accolade is typically its ease of use. Sellers also like the opportunity to add functionality and scale their stores using add-ons from the app store. Shopify’s web design is highly praised, especially among those who appreciate the ability to easily customize their sites without code.

Like with Etsy  — and many other large software companies — Shopify’s customer support receives mixed reviews. Other common Shopify complaints include the added cost of integrations and the extra transaction fees if you can’t use Shopify Payments. Sellers do sometimes have problems with the payment system itself as well — their funds were held, or their Shopify Payments accounts were terminated due to various factors.

If that all sounds a bit scary, understand that a lot of the problems that pop up for Etsy and Shopify are common across the ecommerce world. The good news is that the research you’re doing now will help protect you against some of the more avoidable issues!

Security

Winner: Tie

Etsy and Shopify are both PCI complaint systems, offering site-wide SSL certificates for data encryption. If that all sounded like nonsense and jargon, don’t worry. You should know, however, that part of the reason Pattern websites meet security requirements set out by the data regulatory folks is that your shoppers are directed back over to Etsy checkout pages to complete their transactions. This kind of ruins the illusion that your site was actually your own site, but it does at least help with security. With Shopify, your customers can check out directly on your site with the same level of security in place.

Final Verdict

Winner: Shopify

 

Shopify won this battle handily, coming out ahead in most of our individual comparison categories. And yet, I’ll be the first to admit that the one-sidedness of our comparison does not do the key selling points of Etsy justice. The main advantages to Etsy — the ability to get a shop up and running quickly on a shoestring budget, and built-in access to the traffic of an entire online marketplace — are absolutely huge for beginning sellers. If you’re not ready to go whole-hog into selling online and would prefer to test the waters first, Etsy is definitely the way to start. For first time sellers, it’s akin to setting up your craft booth at an established craft fair, versus plopping your stall on a street corner in the middle of nowhere.

This is all to say that Shopify only really wins if you’re ready to take responsibility for maintaining and drawing traffic to your own website. You’ll need to learn and implement an effective SEO and marketing strategy, for example. This is no small feat for the budding online seller and should not be taken lightly. If done well, however, any customers you obtain are your own, and this is the big reward that accompanies your efforts with Shopify. Your sales and growth will not be limited by super-direct competition with other sellers within a marketplace. You’ll completely sidestep this major downside to Etsy.

When we start talking about actual ecommerce features and web design, Shopify is a more powerful ecommerce tool. Specifically, we’ve seen that Etsy’s Pattern software can’t compete with the standalone storefront-building capabilities of Shopify. For most sellers who are ready to launch their own websites, I’d suggest skipping over Pattern and heading for Shopify. Yes, a Pattern subscription is cheaper than Shopify, but it seems like too much of an intermediate, half-way step that won’t get you fully where you want to go. Besides, there’s no reason you can’t keep your Etsy shop open in the meantime as you grow your Shopify-based store — and, you could ultimately connect an app to sync up your inventory between the two. Etsy could then become one marketing channel of many for your main online store’s top products. Something to consider!

I think if you’ve made it this far, you’re probably ready to at least test the capability of Shopify with a free 14-day trial. Of course, if you’re already an Etsy seller, you can also play around with Pattern’s tools for free before even connecting a domain and going live with your site. Since you’ve got nothing to lose with either platform in that respect, why not set up your own mini-showdown between Pattern and Shopify?

Let us know how it goes in the comments. Happy artsy, craftsy, or artsy-craftsy selling!

Shopify’s eCommerce Options

Mobile POS Online Social Media
Mobile App + Free Card Reader Point of Sale Online Store Social Media Selling
Get Started Get Started Get Started Get Started
Low-cost POS for iOS and Android with free hardware All-purpose POS integrated with all sales channels Build a store or integrate with your current website Sell on Facebook and other platforms
Starts at $9/month Starts at $29/month Starts at $29/month Starts at $9/month
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Want To Open Your Own Bar? Top Tips To Get You Started

Have you ever looked around your local bar and thought, “I could run a place like this”? For many, it’s easy to get caught up in the excitement of potentially opening a bar, but for a select few, this is more than just a fleeting idea. These aspiring entrepreneurs want to make this dream a reality.

Opening your own bar or sports pub seems like a fun and exciting experience. After all, who doesn’t love gathering with friends and family to watch the big game with a cold drink in hand and appetizing snacks on the table? Behind-the-scenes, though, it’s a little different. While it may seem exciting to become a small business owner and call the shots, there’s also a lot of planning and work involved in starting a profitable business.

If opening a little corner pub sounds like a dream come true but you don’t know quite where to begin, you’re in the right place. In this article, we’ll share our top tips for starting the exhilarating and lucrative path to owning your own bar. We’ll go over what you need to legally open a bar, expenses to start and maintain your business, and the importance of a business plan. We’ll also help you decode one of the biggest pieces of the small business puzzle: getting financing for your new business.

If you’re ready to stop dreaming and start doing, keep reading!

Begin With Branding

bar nightclub pos systems

One of the first things you need to do before you take off running is to visualize a name, a theme, and an overarching concept for your bar. Do you picture yourself running a neighborhood pub where all of the locals gather? Or maybe you’d rather open a thriving nightclub where young club hoppers from around your city come to dance the night away?

Evaluate your different options, considering the type of patrons you’d like to attract as well as where you plan to open your bar. For example, if you want a younger crowd, a nightclub in a trendy part of town makes sense. If you want to attract an older, more sophisticated crowd, consider opening a wine bar, martini bar, or cigar bar in a thriving downtown area. You could also target sports fans by opening a sports bar or draw in foodies with a new gastropub.

Knowing what type of bar you want to open helps you plan out additional details. For example, if you’re opening a hot nightclub spinning the latest top 40 hits, country-western décor won’t fit your theme. If you want to draw in a sports crowd, loud music and fog machines probably won’t be on your list of supplies. Choosing the type of bar you want to open and nailing down your target audience first will help you accurately plan everything from the design and layout of your establishment to your name and logo.

Speaking of your bar’s name, it goes without saying that you’ll need one. Because it’s your bar, you’re free to name it anything you want. However, you want to make sure that you choose a name that reflects your concept. “John’s Neighborhood Bar” may incorporate your name, but it doesn’t stand out. When brainstorming ideas, think about the audience you want to bring in and pick a moniker that’s attention-grabbing — a name that lets customers know what to expect when walking through the doors of your bar.

Find A Location

One of the most important first steps in opening your own bar is choosing a location. There are a few options you have at this stage of the game:

  • Purchase an existing bar
  • Start from scratch
  • Buy a franchise

There are advantages and disadvantages for each option. If you purchase an existing bar, you inherit the existing clientele and may see immediate income. However, you could pay a steep premium if the bar is extremely successful at the time of sale. You may also rack up high costs if the bar doesn’t mesh with your vision and you have to pay for renovations.

If you start from scratch, you’ll be able to see your vision through from start to finish. However, it may take many months (or even a year or longer) to open your doors, and the costs can really rack up if you have to completely renovate a space or build a new bar from the ground up. With this option, careful planning, budgeting, and at least some knowledge of the bar and restaurant industry are needed for the highest chance of success.

Finally, you could purchase a franchise. This option could shield you from some of the mistakes you’d almost certainly encounter if you attempted to go it alone. However, you won’t be able to fully showcase your creativity with a franchise.

Finding a location takes planning and a dedicated eye on financials. Sure, putting your bar in a trendy and popular neighborhood could help your business become your city’s next hotspot, but real estate costs may be prohibitively high. Before you put down money on a location, make sure to do your market research and understand the costs.

Create A Business Plan

Every successful business starts with a solid business plan, and a bar is no exception. Not only will your business plan act as a blueprint for starting, operating, and growing your business, but it’s also a necessity if you plan to apply for business loans from a bank or other lender.

No two business plans are exactly alike, but there are some standard sections you should have in yours. This includes:

  • Executive Summary: Basic information about your business and why it will be a success
  • Company Details: Specific details about your business
  • Organizational Chart: Outline of your company structure
  • Marketing Strategy: How will you market your business?
  • Financial Projections: Show the financial outlook of your business

Your business plan should showcase the goals of your company and serve as a map for you to follow, keeping your business on the right path. Lenders will want to see a business plan that demonstrates thought, intelligence, research, and reasonable plans for success in the future.

Register Your Business

Before you open your bar and begin serving customers, you have to register your business. First things first: register the business’s name with your state. This can be completed via the county clerk’s office in the state where you’ll operate.

Next, you’ll need to determine your formal legal structure. Do you plan to be a limited liability company or a corporation? Your business structure will determine how much you pay in taxes, what paperwork needs to be filed with the government, and your personal liability. If you’re unsure of which structure is right for your new business, consult with an attorney, accountant, or business counselor.

Your business will also need to be registered with the state revenue office and the Internal Revenue Service. Because your business will have employees, you’ll be required to apply for an Employer Identification Number. You’ll also need a sales tax permit.

Finally, you’ll be required to obtain the proper licenses and permits to legally operate your business. Because your bar will serve alcohol, a liquor license is required. If your bar serves food, you’ll need a license from the health department. You can find out more about the requirements in your area by contacting your state Department of Commerce.

Obtain A Liquor License

In the previous section, we touched on acquiring the right permits and licenses. One of the most important things you need to open a bar — if not the most important thing — is a liquor license. This license makes it legal for you to sell alcohol in your business. This should be a top priority, as getting approval from your state’s Alcohol Beverage Control agency typically takes at least one month. In some cases, it may take up to six months to get approved.

The steps required to obtain your liquor license vary by state. In all states, though, you will be required to fill out an application. You may be required to submit additional documentation with your application, such as a certificate of incorporation, your proposed menu, and the certificate of title for your bar. You may also be required to pay a processing fee.

Once your application is reviewed and approved, you’ll have to pay for your license. Fees vary by state and range from a few hundred dollars to several thousand dollars. Your license will last for at least one year, and you must pay a fee when it’s time to renew.

Even though getting your liquor license is a hassle and can get very expensive depending on your state, this is a critical step that can’t be overlooked. To learn more about the process, fees, and type of license required for your business, contact your state ABC agency.

Seek Funding

Business licenses. A construction loan or lease. Renovations. You haven’t even stocked your bar, and the expenses are already piling up. Unless you’re already a successful entrepreneur with plenty of money in the bank, these expenses may seem completely overwhelming.

Very few small business owners have the resources to launch a business on their own. Instead, they turn to lenders for money to fund startup costs. Even after you launch your business, there will always be a need for more capital, whether an emergency has popped up, you need to expand, or a slow period has affected your day-to-day operations.

Even if your credit history is blemished, you’re a startup with no business history, or you face other challenges, there’s funding out there if you know where to look. Start with these options.

Personal Savings

Many new business owners have at least a little bit of money put away in their savings accounts. If you’ve been socking away pennies for a rainy day, now may be the opportunity to put these savings to use. By using your own money, you won’t be indebted to a lender (or at least not as much). You won’t have to worry about making scheduled payments, and there won’t be interest or fees to worry about. On the downside, if your business is unsuccessful, you lose part — or all — of your savings.

Loans From Friends & Family

If you have a friend or family member with extra money to invest, pitch them your business idea to see if they’re interested. But be careful! Even though you have a more personal relationship with this person, don’t just have a casual conversation asking to borrow funds. Instead, give them your business plan and present your pitch just as you would with a bank or other lender. Show them why you think your business will be a success, and give them a good reason to invest in you.

If you come to a loan agreement, get everything in writing, including the total borrowing amount, rates, and terms of the loan. Put your personal relationship aside and make sure you follow all terms of the loans just as a responsible borrower should.

Personal Loans For Business

Getting a startup loan from a bank or other lender can be tough. Sure, there are options, such as Small Business Administration loans, but these loans can be very difficult to receive — especially if you have a short time in business or low annual revenue. However, if you have a solid personal credit profile, more low-cost loan options are available to you.

Instead of going directly for a business loan, try applying for a personal loan for business. With a business loan, lenders consider your time in business, personal and business credit histories, and annual revenues. But with a personal loan, your personal credit score and income are used to determine if you qualify.

By going this route, you may be able to avoid many of the high fees and interest rates of alternative business loans. Depending on your credit history and the lender you select, your cost of borrowing could be much lower with a long-term, low-interest personal loan.

Recommended Option: Upstart

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You may qualify to receive a personal loan of between $1,000 and $50,000 through Upstart. These loans have competitive interest rates starting at 7.74% and going up to 35.99% based on your creditworthiness. Repayment terms of 36 or 60 months are available. The application process is quick, easy, and completely online.

To qualify for an Upstart personal loan, you must meet a few basic requirements, including having a valid email address, verifiable personal information, a source of income, and a U.S. checking account. You also have to meet the lender’s credit requirements, which include:

  • A credit score of 620 or above OR 580 or above for California residents
  • A solid debt-to-income ratio
  • No bankruptcies or public records
  • No delinquent accounts or accounts in collections
  • 6 or fewer inquiries on your credit report over the last 6 months

Lines Of Credit

A more traditional financing option is a flexible line of credit. The one drawback with a line of credit is that business performance is typically a qualifying factor. If you haven’t made any sales, you won’t qualify, so this isn’t a good financial option if you’re not in business yet.

As you build your business, though, a line of credit can be very useful. It can be used to purchase supplies, inventory, or cover that emergency that pops up when you least expect it. You can also use your line of credit to cover payroll or daily operational expenses.

When you receive a line of credit, a lender provides you with a credit limit. You can make as many draws as you need against the line of credit up to and including the credit limit. Once you initiate a draw, the lender will transfer the money directly to your bank account, giving you access to the money you need. Over time, you’ll make payments that are applied to the principal (the amount you’ve borrowed) and any fees and/or interest charged by the lender.

A line of credit is a revolving account, so as you repay the lender, money becomes available to draw again.

Recommended Option: Fundbox

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You may qualify to receive a line of credit of up to $100,000 through Fundbox. Fundbox lines of credit have no restrictions and can be used to cover any business expense. Once approved, you’ll be eligible to make draws immediately and receive funds as quickly as the next business day.

The Fundbox application process takes just minutes, and it’s easy to qualify. The lender focuses on the performance of your business — not your business or personal credit history — so even borrowers with credit challenges can qualify. You do, however, have to meet the following requirements:

  • Own a U.S.-based business
  • Have a business checking account
  • At least 3 months of transactions in your business bank account or at least 2 months of activity in a supported accounting software
  • At least $50,000 in annual revenue

Once you make a draw on your line of credit, automatic drafts are made weekly from your linked business checking account. If you do not use your funds, you do not pay. Repayment terms are 12 or 24 weeks and fees start at 4.66% of the total borrowing amount.

Business Credit Cards

Business credit cards work just like the personal credit cards in your wallet, only they’re used to pay business expenses. Business credit cards are great for emergency expenses or any time your cash flow is a little short. You can also make recurring payments, such as your utility bills, using a business credit card. This is especially beneficial if you have a rewards card that gives you cash back or other rewards simply for making qualified purchases.

When you apply for a credit card, your lender will set a credit limit if you’re approved. You may spend up to and including this credit limit with one or multiple transactions anywhere credit cards are accepted. Each month, you’ll make a payment that is applied to the principal, interest, and fees charged by the lender. As you pay down your balance, funds will become available to use again. If you don’t have a balance, you won’t pay any interest, although you may have to pay annual fees depending on the card you select.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

If you have an excellent credit score of at least 740, you may qualify for the Chase Ink Business Unlimited credit card. This is a rewards card that provides you with unlimited 1.5% cash back on all purchases made for your business. As a new cardholder, you will also be eligible to receive a $500 cash back bonus if you spend $3,000 within 3 months of opening your account.

The Chase Ink Business Unlimited card comes with a 0% introductory APR for purchases and balance transfers for the first 12 months. After the introductory period, the card has a variable APR of 15.49% to 21.49%. This card comes with no annual fee. You can also receive additional cards for employees at no extra cost.

Rollover For Business Startups (ROBS)

Do you have a retirement account? If so, you can legally leverage these funds to pay your startup costs without facing tax or early withdrawal penalties. With a Rollover for Business Startups (ROBS) plan, you can put your retirement account to work for your new business.

It’s possible to access your retirement account funds with no penalties in just a few easy steps. First, create a new C-corporation. Next, create a qualified retirement plan for the corporation. Then, the funds from your qualified retirement account are rolled over into the new retirement plan. Finally, the funds that were rolled over can be used to purchase stock in the corporation, giving you access to the capital you need to start or grow your business.

Throughout the process, you do have to remain compliant and follow legal guidelines. For most new business owners, the process can get confusing, which is why ROBS providers are available to help. A ROBS provider will set up your ROBS plan to ensure everything is by the book. To get started, you’ll need to pay a setup fee, then pay a monthly maintenance fee for maintaining your account.

The great thing about ROBS plans is that you are using your own money, so you won’t have to pay interest on a loan. You will, however, have to pay a monthly fee to maintain your account. You also risk losing your retirement funds if your business is unsuccessful.

Recommended Option: Benetrends

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Benetrends is a pioneer of ROBS, launching its Rainmaker Plan in the 1980s. This visionary-plan is the longest-running ROBS plan, and Benetrends offers many benefits that outshine its competitors.

With just four easy steps, Benetrends can get the capital you need from your qualified retirement plan. With the Rainmaker Plan, you can have your funding is as little as 10 days.

To qualify, you must have an eligible retirement plan with at least $50,000. Most retirement plans are eligible, with the exception of Roth IRAs, 457 plans for non-governmental agencies, and distribution of death benefits from an IRA other than to the spouse. There are no time in business, annual revenue, or personal credit score requirements.

To get started with Benetrends, you’ll be required to pay a setup fee of $4,995. After paying this fee, your C-corporation and ROBS plan will be set up. After your plan is set up, you’ll be required to pay a monthly maintenance fee of $130. This fee covers ongoing support and services including legal support, audit protection, and compliance.

Purchase Financing

Paying your vendors will be an ongoing expense for your business. You have multiple options available to pay your vendors. You can pay out-of-pocket, you can use a credit card or line of credit, or you can take advantage of purchase financing.

With this type of financing, your vendors are paid immediately, while you get more time to pay. A lender pays your vendors up front, then you repay the lender over a set period of time. The lender will add fees and/or interest to your loan balance for paying your expenses upfront.

By using purchase financing, you’re able to pay your vendors immediately to receive the supplies, inventory, or services you need for your bar. Then, you can spread out your payments over time to make these purchases more affordable for your business.

Recommended Option: Behalf

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Behalf offers purchase financing of up to $50,000 for qualified borrowers. Repayment terms of up to 180 days are available. Behalf charges fees of 1% to 3% of the borrowed amount per month for using this service. There are no additional fees. You can repay on a weekly or monthly schedule.

Behalf’s financing can be used to pay merchants for inventory or services. However, there are some restrictions. You can’t pay bills, cover payroll, or pay other existing debt through Behalf.

Behalf analyzes the performance of your business when making its approval decisions. There are no time in business or business revenue requirements. Behalf does not have a minimum personal credit score for approval, although your credit history will be considered during the application process.

Create Your Menu

Before you open your bar, you need to know what food and drinks you plan to serve and what equipment is needed to properly prepare each menu item.

When planning your menu, think about your theme and the type of customers you plan to attract while also keeping your budget in mind.

Decide what type of drinks you’ll serve. Most bars serve a variety of wines, beers, liquors, and mixed drinks, but what you serve may be different based on the theme of your bar. For example, in a sports bar, your drink menu may feature a wide selection of beers. If you open a nightclub, you want to have a variety of liquors and mixers on hand to create many different types of drinks. If you have a cigar bar, wines and craft beers may make up the bulk of your menu. Again, the type of bar you want, the theme, and your target audience can help you determine what you serve.

If your bar will serve food, think about the types of food you’ll serve. In a neighborhood bar, appetizers like fried cheese sticks or nachos may be enough to keep your customers happy. If you have a gastropub, meals made with high-quality ingredients should make up your menu. Remember, creating the perfect menu takes careful planning, so take the time to brainstorm your ideas.

It’s also wise to start off small and add new items as your business grows. If you have a huge menu that features every type of food and beverage you could think of, your bar will require more equipment. More equipment equals more expenses. Working with a smaller menu can also ensure that your bartenders and kitchen staff aren’t overwhelmed and can focus on creating high-quality food and drinks. As you draw in customers to your bar, you can tweak your menu based on what customers are ordering, what gets rave reviews, and what falls flat.

Once you’ve determined what your bar will be serving, you’ll need to talk with suppliers to get estimates of costs. As you approach opening day, you’ll place your order with your selected suppliers.

Still stuck on your menu? Check out our tips for creating a great menu.

Purchase Your Equipment

Once you’ve secured a location and have moved further into the process of building your bar, it’s time to think about the equipment and fixtures that you need. What your bar needs depends on the theme you’ve selected and what you’ll be serving, but some items you may consider include:

  • Bar & barstools
  • Benches
  • Tables & chairs
  • Industrial ovens & other kitchen equipment
  • Coolers, refrigerators & ice bins
  • Blenders & other bar equipment
  • Big-screen TVs
  • Sound system
  • Microphones & other audio equipment
  • Beer taps

After you’ve leased, purchased, or built your building, it’s important to create a detailed layout of your business. You want to ensure that you have enough room for everything required to run your bar, while also leaving enough space for seating, a dance floor, and other features that will be important to your customers. As you grow your business and need to add or update equipment, consider equipment financing to make these expenses more manageable.

Lender Borrowing Amount Term Interest/Factor Rate Additional Fees Next Steps

$2K – $5M Varies As low as 2% Varies Visit Site

$5K – $500K 24 – 72 months Starts at 5% Yes Compare

Up to $250K 1 – 72 months Starts at 5.49% Varies Compare

Select Your POS System

ipad POS

Gone are the days when most businesses just needed a cash register or two for their customers. With the rising use of credit cards, debit cards, and mobile payments, businesses — especially bars — need a more advanced system for accepting payments.

A point of sale (POS) system is one of the most important pieces of equipment you’ll need for your new bar. A POS system combines software and hardware to create a centralized point for business operations. Through this system, you’ll be able to take orders and accept payments, but that’s not all.

Some of the most advanced POS systems come with features beneficial to bars. This includes built-in tipping systems, inventory management that allows you to track your stock levels, and an open ticket system for creating bar tabs.

Your POS system plays an important role in your business, so it’s important that you know what to look for before making your purchase. Check out our top picks for POS systems for bars and nightclubs.

Lightspeed Restaurant ShopKeep Toast

Lightspeed Restaurant

ShopKeep

Toast

TouchBistro

Breadcrumb POS by Upserve

ShopKeep alternatives for restaurants

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Review

Monthly fee

$69+

Get a quote

$79+

$69+

$99+

Cloud-based or Locally Installed

Cloud-based

Hybrid

Cloud-based

Locally installed

Cloud-based

Compatible credit card processors

Cayan or Mercury in US; iZettle in Europe

Shopkeep Payments & some others; contact your processor to see if they are supported

Toast only

TouchBistro Payments, Square, PayPal, Moneris, Cayan, Chase Paymentech & more

Upserve Payments only

Business size

Small to medium

Small to medium

Small to large

Small to medium

Small to large

Hire Employees

To make sure your bar is a success, you need to have the right employees working for you. If you haven’t done so already, you need to apply for an Employer Identification Number for tax purposes. Next, you need to determine how many employees you need and what their roles will be in your business.

You’ll need at least one bartender that prepares and serves drinks in your bar. You will need to add additional bartenders based on the number of bar areas you have in your business, as well as the number of customers you have to serve.

If your bar will serve any type of food, you will also need a kitchen staff. This includes at least one cook, but you may also need prep cooks, dishwashers, and other staff as your business grows.

You’ll also need servers to distribute food or pass out drinks to customers not seated at the bar. The number of servers you have is based on the size of your bar and how busy it gets.

While your servers may be able to handle cleaning tables at first, as your business grows, you may want to add a busser or two, who are responsible for cleaning off tables for new customers.

You may also require additional staff. For example, you may hire a doorman that checks IDs before customers enter the door. A security guard may also be a staff member you hire to handle tempers that flare from customers who’ve had one too many.

You also need at least one manager to oversee the staff. A manager’s role may include hiring employees, firing employees, training, making schedules, and making sure that all staff members are doing their jobs properly.

Before you start seeking job applicants, make sure to create an in-house organizational chart to know exactly who you need to hire. You also need to do your research to figure out what salaries you will offer, as well as any benefits.

Unsure of where to hire new employees? You have a few options. First, post a job ad on online job boards or classified ads to find potential employees. This is an inexpensive (or even free) way to find candidates.

You can also ask for referrals. If you know someone in the industry, ask if they have any new hires to recommend. Don’t know anyone in the industry? Ask other colleagues, family, and friends for recommendations.

Bolster Your Web Presence

After completing all of these steps, you’ll be that much closer to opening your bar. However, you want to make sure to spread the word about your business, and there’s no better way to do that than with the internet.

One of the easiest ways to get the word out about your business is through social media. Facebook, Instagram, and Twitter are just a few of the ways you can reach your target audience, and Yelp For Business is a must. Best of all, these accounts are free to use. As you grow, you may consider moving past the free advertising you get through your posts and pictures and invest in advertising on these social platforms.

You also need a good website. Keep your bar’s theme in mind when you design your site. Make sure that your website reflects the image you want to project. There are many small business website builders you can look into if you want to create your website yourself. These make it easy for you to create a professional website with no prior web design experience required.

Service Pricing Hosted or Licensed Templates & Themes Compatible Credit Card Processors Next Steps

$14 – $179/month Hosted Excellent Many

Go to Site

Free – $29.90/month Web-Hosted Excellent Many

Go to Site

Free – $25/month Web-Hosted Average Many

Go to Site

$0/month Hosted Good Square Payments

Go to Site

Make sure that you include your address and phone number on your website. Information about your bar including dress code and hours of operation are also extremely useful for customers. You can also include your menu, photos of your establishment and patrons, and news and updates on your website.

Also, remember that word-of-mouth is one of the best forms of advertising for a bar. If your customers love your drinks, food, service, and atmosphere, they’ll tell others. If they dislike your bar, they’ll also tell others … who will make sure to avoid your establishment. Whether your bar is brand new on the block or you’ve been in business for some time, keep customer satisfaction high so that customers online and off will have nothing but positive reviews for your business.

Final Thoughts

As you can see, creating a bar where everyone gathers to have a great time takes a lot of hard work. But just as Theodore Roosevelt said, “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty.” Running your own bar means planning, budgeting, and always being ready for growth. While your bar won’t make you an overnight millionaire, you can become a successful entrepreneur with this potentially-lucrative venture if you put in the work.

The post Want To Open Your Own Bar? Top Tips To Get You Started appeared first on Merchant Maverick.

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LoanBuilder VS Kabbage: Which Lender Is Best For Your Business?

We all know that running a small business requires capital. While it would be great to cover all of our expenses out-of-pocket, for most small business owners, this just isn’t a reality. For times when money is tight, a small business loan makes expansions or simply covering day-to-day operations possible.

But what happens when your revenues are too low, your time in business too short, or your credit score doesn’t meet bank requirements for a traditional loan? Instead of giving up, turn to an alternative lender like LoanBuilder or Kabbage.

LoanBuilder and Kabbage have emerged as frontrunners among small business lenders. Online applications eliminate the need for face-to-face visits with your local banker, to begin with. Borrower requirements are also more relaxed, and you can get the money you need in days — no more waiting weeks for approval.

You want to make the best financial decision for your business, so which lender do you choose? In this post, we’ll compare these two lenders to help you make the right choice. We’ll take an in-depth look at the application process, break down terms and fees, and help guide you on your path to small business financing.

Ready to get started? Let’s dive in.

Services Offered

Winner: Kabbage

LoanBuilder provides capital to small business owners through short-term loans. When you apply for a LoanBuilder loan, you can receive between $5,000 and $500,000 for your business. Once approved, you’ll receive one lump sum of cash that can be used as working capital, for an emergency, to expand your business, or for any other business purpose.

One of the benefits of a LoanBuilder loan is that you can “build” your own loan. With the LoanBuilder Configurator, it’s possible to check out different options to find the financing solution that’s best for your business. You can easily adjust the borrowing amount and terms to compare your options. For example, if you want low monthly payments, select a longer repayment term and lower borrowing amount. If you’d rather reduce your fixed fee, opt for a shorter term.

If you want more flexible financing, Kabbage is the better choice for your business. Through Kabbage, you can receive a line of credit with a limit of $2,000 to $250,000.

A Kabbage line of credit is significantly different from a traditional loan. Loans — like the ones available through LoanBuilder — are sent to your bank account in one lump sum. Once you’ve paid off the loan, you’ll have to reapply to receive more money. With Kabbage’s line of credit, you’ll be assigned a credit limit, and you can make one or more draws up to and including that credit limit. Each payment is applied to your balance plus fees. As you repay borrowed funds, they’ll become available for you to use again — no additional approvals needed.

One of the best things about a Kabbage line of credit is that you don’t have to use it immediately. With a traditional loan, you are still required to make regular payments, even if the funds sit untouched in your bank account. With a line of credit, though, you won’t have to make payments until you request a transfer of funds. This makes it a much better option for those “what if” scenarios you can’t predict. It is this flexibility that gives Kabbage a slight advantage over LoanBuilder.

Borrower Qualifications

Winner: Kabbage

LoanBuilder Kabbage

9 months

Time In Business

12 months

$42,000 per year

Minimum Sales

$50,000 per year

550

Minimum Credit Score

N/A

Even if you’ve been turned down for a small business loan in the past, you may still qualify for funding through LoanBuilder. Unlike traditional lenders, LoanBuilder has more flexible criteria for receiving one of its loans.

To qualify for a LoanBuilder loan, you must meet the following minimum requirements:

  • U.S.-based business in a qualifying industry
  • Time in business of at least 9 months
  • At least $42,000 in annual revenue
  • No active bankruptcies
  • Personal credit score of 550 or above

Please note that these are minimum requirements and that meeting these minimum requirements does not guarantee your approval.

During the application process, you can review your offers with no impact to your credit score. If you decide to move forward with applying for and accepting a loan, a hard credit pull will be initiated by LoanBuilder, which may have a small impact on your credit score.

While the requirements for a LoanBuilder loan are pretty simple, it’s even easier to qualify for a line of credit through Kabbage.

To qualify, the minimum requirements of Kabbage are:

  • In business for at least 1 year
  • At least $50,000 in annual revenue OR at least $4,200/month for the last 3 months

Kabbage looks at the performance of your business when determining whether to approve your line of credit. However, a hard pull will be performed to check your personal credit, although the lender has no credit score minimums to qualify.

Having no minimum credit score requirements really makes Kabbage stand out from other lenders. If you’ve had personal credit challenges, such as an active bankruptcy or a credit score that falls below 550, Kabbage is the better financial product for your business. However, if you have a shorter time in business or lower revenues but meet all credit requirements, you may want to consider giving LoanBuilder a shot.

Terms & Fees

Winner: LoanBuilder

LoanBuilder Kabbage

$5,000 – $500,000

Borrowing Amount

Up to $250,000

13 – 52 weeks

Term Length

6 or 12 months per draw

One-time fee of 2.9% – 18.72% of the borrowing amount

Borrowing Fee

1.5% – 10% of the borrowing amount per month

None

Other Fees

None

Now, it’s time to look at one of the most important factors to consider when borrowing money from any lender: how much is it going to cost? Before we break down the costs between LoanBuilder and Kabbage, note that these are alternative lenders that provide funds to borrowers with less-than-perfect credit. As such, these financial products have a higher cost of borrowing than traditional loans you’d receive from your bank or credit union.

A great feature about LoanBuilder loans is that just one fixed fee is charged, making it easy to understand the cost of borrowing. Fees range from 2.9% to 18.72% of the borrowing amount. The most creditworthy borrowers will be rewarded with the lowest fees. There are no origination fees or additional costs added to your loan.

LoanBuilder loans have terms between 13 to 52 weeks. Terms are based on the amount of your loan. Each week, payments are automatically withdrawn from your business bank account.

Kabbage’s fee structure is a little different. A fee is charged each month when there is a balance. Fees range from 1.5% to 10% and are based on the performance of your business. Your fees may change throughout your repayment period. For example, you may pay a 3% rate for the first 6 months, then pay just 1.25% for the remaining 6 months. This is just an example, and your actual fees may vary.

Kabbage has repayment terms of 6 or 12 months and are based on the amount you borrow. If you borrow less than $10,000, your repayment terms will be set at 6 months. If you borrow $10,000 or more, you can choose between terms of 6 or 12 months. Payments are withdrawn monthly through automatic drafts of your business bank account.

If you prefer to make weekly payments, LoanBuilder is the better choice between the two lenders. If you want a loan with a single fixed fee structure that’s easy to understand, LoanBuilder is also the better option. However, if you’d prefer to make one monthly payment, consider applying for a Kabbage line of credit.

The Application Process

Winner: Kabbage

Now that you know more about the features of LoanBuilder and Kabbage, you’re getting one step closer to choosing and applying for a financial product. Before you start filling out your personal information, though, let’s explore what to expect during the application process.

The first step to receiving a LoanBuilder loan is to fill out the online questionnaire. This questionnaire should only take about 5 to 10 minutes to complete. During this step, you will provide contact information, personal information, business details, and verify your identity.

Once you’ve completed the questionnaire, one of two things will occur: your application will be declined or you’ll receive an offer. If your application is turned down, LoanBuilder will provide you with further details and you’ll be eligible to reapply in 30 days. At this point, you’ll need to pursue other financing options. However, if you’ve received an offer, you’ll be able to adjust the duration of your loan and the borrowing amount to compare costs and select the terms that work best for your business.

At this point, your offer is just a pre-qualification. At any point in the process your application may be declined, and receiving an offer is not a guarantee of approval.

After you’ve selected your terms, you’ll be required to fill out a more comprehensive application. You’ll provide more information to the lender, and you’ll be required to submit documentation such as business bank statements. During this process, a hard check will be performed on your credit.

Once LoanBuilder has analyzed your business financials and personal credit history, your application will be approved or declined. If you’re approved, you’ll electronically sign a contract and the funds will typically be deposited into your business bank account the next business day.

You can also bypass the online system and contact a LoanBuilder Business Funding Expert through the lender’s toll-free number. This may be the best option if you have additional questions about LoanBuilder’s loans. However, the online process is typically much faster and easier for most business owners.

While it is possible to receive your funds just one business day after applying, most small business owners will receive funding within 2 to 7 days.

Kabbage’s application is also available online and can be completed in just minutes. When applying for a Kabbage line of credit, you’ll start by providing information about your business, such as your business name and phone number. During the first step, you’ll also input an email address and create a password. This information will serve as your login credentials for the Kabbage website and app.

Next, you’ll link your business accounts so Kabbage can evaluate your business revenue. You can connect your business bank account from institutions including PNC, TD Bank, Chase, and Bank of America, or you can link business services such as PayPal, Square, Etsy, or Amazon. After you’ve been approved, you can link multiple services and accounts to maximize your credit limit.

Finally, Kabbage will request personal information. This is very basic information including your legal name and home address. You’ll also provide your Social Security Number. At this stage, Kabbage will initiate a hard inquiry on your personal credit.

Once you’ve completed this step, you’ll receive an approval decision. If you’ve been approved, you’ll be taken to the Kabbage Dashboard. Through this dashboard, you can view your credit limit and immediately initiate your first transfer. You can withdraw your full credit limit, a portion of your credit limit, or wait until a later date to make a draw. On this dashboard, you’ll also be able to select your repayment terms and view your payment schedule.

After you make your first draw, funds will be sent to your business bank account immediately. You should then receive the funds within 1 to 3 business days.

Once you’re approved for a Kabbage line of credit, you can also request the Kabbage Card. You can use the Kabbage Card anywhere Visa cards are accepted. Simply swipe your card, and Kabbage will create a new loan with 6-month terms and the same fees as your other loans.

Both LoanBuilder and Kabbage simplify the loan application process. However, Kabbage is the clear winner in this round. Kabbage’s simple application process is hassle-free and has no documentation requirements. With Kabbage, you can receive an approval decision in just minutes and put your line of credit to work for your business immediately.

And The Winner Is …

LoanBuilder and Kabbage each offer benefits to small business owners. LoanBuilder loans provide short-term financing options for business owners that wouldn’t qualify for financing through traditional lenders. However, Kabbage stands out for a number of reasons.

The simple application process, flexibility, easy borrowing requirements, and lightning fast approvals are just a few of the benefits Kabbage offers to small business owners.

Which Is Best For Your Business?

LoanBuilder and Kabbage are similar in that they offer alternative financial solutions for business owners that may not qualify for other loans or financial products. However, there are distinct differences between the two. Determine how much you need to borrow, nail down how you plan to use the funds, and make your decision from there.

Choose LoanBuilder If…

  • You prefer to make smaller weekly payments rather than a larger monthly payment
  • You want one lump sum of money that can be repaid over time
  • You need to borrow more than $250,000

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Choose Kabbage If…

  • You’d rather make monthly payments
  • You want a flexible line of credit that you can use when you need it
  • You want an instant approval with no hassles or paperwork

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Final Thoughts

Kabbage and LoanBuilder both provide quick financial solutions for small business owners. However, don’t forget that this speed and convenience may come at a high cost. These are short-term options that may have higher fees than other financial products. Shop around with lenders, compare any offers you’ve received, consider other loans such as accounts receivable financing, and evaluate the cost of any loan you choose to accept.

By doing your homework, you can better ensure you’re making the most financially-savvy move for your small business.

If you’re still undecided, check out our other resources, including How To Get A Small Business Line Of Credit and The Business Owner’s Guide to Getting A Short-Term Loan.

The post LoanBuilder VS Kabbage: Which Lender Is Best For Your Business? appeared first on Merchant Maverick.

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Kabbage VS Fundbox: Which Lender Is Best For Your Small Business?

In the past, getting a business loan was a hassle. Strict requirements, in-person visits to a bank or lending institution, and weeks of waiting could result in a low-cost, long-term loan option … or you could go through the process only to receive a big fat “NO.”

With the rise of the internet has come the emergence of alternative lenders – lenders with easy online application processes, fast approvals, and low requirements.

Kabbage and Fundbox are two leading alternative lenders, providing small business owners with the funding they need to operate or expand their businesses. While the two have similar product offerings, there are a few significant differences. In this post, we’ll compare the two side-by-side, breaking down the features of each to help you decide which is best for your business.

Services Offered

Winner: Fundbox

Through Kabbage, you can receive a flexible line of credit to cover business expenses. Kabbage has one of the highest borrowing limits among alternative lenders that offer lines of credit, providing qualified borrowers with $2,000 to $250,000. Your line is determined by the performance of your business.

Fundbox also offers lines of credit but with lower borrowing limits. With Fundbox Direct Draw, the lender’s traditional line of credit, you can be approved for a maximum of $100,000. Like Kabbage, Fundbox’s lines of credits are based on the performance of your business.

If you have unpaid invoices, you can take advantage of Fundbox Credit, the lender’s accounts receivables financing service. You can receive a line of credit up to $100,000 based on your unpaid invoices. You can only get one financial product through Fundbox, so you can qualify using either your unpaid invoices or your bank statements. We’ll go into borrower qualifications and the application process in more detail later in this article.

With both lenders, there are no restrictions on how you use your funds. You can use your lines of credit to purchase inventory or supplies, cover payroll, pay operational expenses, expand your business, or take care of an emergency.

While both lenders offer similar products, Fundbox comes out on top because you can also use your accounts receivables to qualify for a line of credit.

Borrower Qualifications

Winner: Fundbox

Kabbage Fundbox

12 months

Time In Business

N/A

$50,000 per year

Minimum Sales

$50,000 per year

N/A

Minimum Credit Score

N/A

N/A

Other

At least 2-3 months using compatible software/services

Qualifying for Kabbage is easy for most small business owners. To qualify, you must meet two minimum requirements:

  • At least 12 months in business
  • At least $50,000 in annual revenue OR at least $4,200/month for the last 3 months

Your personal credit score is not a consideration, as Kabbage bases approvals on business performance. However, a hard pull on your credit will be initiated during the application process.

Qualification for Fundbox is based on the product you select. For the Fundbox Direct Draw line of credit, you must meet the following requirements:

  • A business checking account
  • At least $50,000 in annual revenue
  • At least 3 months of transactions in a business bank account

To qualify for Fundbox Credit invoice financing, requirements are similar. You must have:

  • A business checking account
  • At least $50,000 in annual revenue
  • At least 2 months of activity in supported accounting software

With Fundbox’s invoice financing, you’ll link your accounting software to determine if you qualify. Fundbox currently supports 10 accounting software programs including QuickBooks Desktop, QuickBooks Online, Ebility, Harvest, InvoiceASAP, Jobber, Kashoo, FreshBooks, Zoho, and Xero.

It’s easy to see that both Kabbage and Fundbox have more lenient requirements than other lenders. However, Fundbox has the edge in this round because it doesn’t have time in business requirement. With Kabbage, you must be in business for at least a year. With Fundbox, newer businesses can qualify for funding provided they meet all other requirements.

Terms & Fees

Winner: Fundbox

Kabbage Fundbox

Up to $250,000

Borrowing Amount

Up to $100,000

6 or 12 months

Draw Term Length

12 or 24 weeks

1.5% – 10% of the borrowing amount per month

Borrowing Fee

Starts at 4.66%

None

Other Fees

None

Now, let’s explore one of the most important factors of small business financing: how much does it cost? One area where both Kabbage and Fundbox are similar is that both lenders offer transparent fee structures. However, when you break down the terms and fees of each, there are several notable differences.

Kabbage offers terms of 6 months for draws under $10,000. For draws of $10,000 or more, you can select from terms of 6 or 12 months. Through Kabbage, you make monthly payments that apply to your principal plus fees.

Kabbage charges a monthly fee each month you have a balance. Fees range from 1.5% to 10% of the total amount of the loan and are based on the performance of your business. Your fee rate may be lower as you pay off your loan. For example, if you have a 12-month loan, you may pay 3% for the first six months and 1.25% for the last six months. Of course, this is just an example, and you won’t know what rates you’ll receive until you apply for a line of credit.

If you pay your loan off early, there are no prepayment penalties and you will eliminate any remaining fees, so this is a good way to save money.

With each draw, you will receive a breakdown of your loan, including the total amount of fees and the amount of each monthly payment. Your loan documents will include the SmartBox Capital Comparison Tool that will provide information including the disbursement amount, repayment amount, terms, and APR.

Other than the monthly fee, there are no hidden fees or additional costs to make a draw from your line of credit. If you do not use your funds, you will not pay any fees.

Fundbox has repayment terms of 12 weeks or 24 weeks. Weekly payments are applied to your principal plus fees.

Fees and terms are the same for Fundbox Credit and Direct Draw. Fees start at 4.66% of the draw amount and are based on the performance of your business. If you pay your balance off early, all remaining fees are waived.

You will be able to view your fees and repayment schedule after you’re approved for a Fundbox line of credit and initiate a draw. Your borrowing amount plus fees are equally distributed, so you will pay the same amount each week.

Breaking down the APR of each lender makes it a little easier to compare. Fundbox APRs are between 13% to 60%, while Kabbage’s APRs are between 20% and 80%. Based on these numbers, Fundbox appears to be the less expensive option, but you may find Kabbage to be more affordable (your own personalized rates are based on the performance of your business).

The Application Process

Winner: Kabbage

Kabbage and Fundbox have similar application processes, but let’s break down each so you know exactly what to expect.

It’s possible to apply for and receive a Kabbage line of credit in just minutes with the lender’s easy online application. Once you’ve determined that you meet all minimum requirements, you can start the application. This requires basic information about your business including your business name, address, and phone number. At the beginning of the application process, you’ll also enter your email address and create a password that you’ll use to log into your account.

Next, you’ll connect your business accounts to determine 1) if you qualify for a line of credit and 2) your credit limit if you’re approved. You can securely link your bank account from institutions including US Bank, Citi, USAA, PNC, Chase, and Bank of America. You can also link to other business services with revenue transactions, such as PayPal, Square, eBay, Stripe, or Sage.

Finally, you will be required to provide Kabbage with personal information, including your Social Security Number. At this point in the process, a hard pull on your credit will be performed.

Once you’ve submitted your information, you’ll receive a notification of your approval status in just minutes. If approved, you’ll be taken to your Kabbage Dashboard, where you can view your available credit facility and initiate draws. You can make a draw up to and including your credit limit immediately, but there is no obligation to withdraw funds at this time.

After you’re approved, you can also link additional business bank accounts and services to qualify for a higher line of credit. Your linked business bank account will be used for automatic drafts once you have taken funds.

One final thing to note about Kabbage is that you can be approved for a line of credit of up to $150,000 on the spot. Qualifying for funding up to $250,000 requires a manual review.

After you’ve been approved for a Kabbage line of credit, you can request the Kabbage Card. If you request funds to be sent to your bank account, you’ll see the money in 1 to 3 business days. However, the Kabbage Card gives you immediate access to your line of credit.

The Kabbage Card can be used anywhere Visa cards are accepted. Simply swipe your card to make your purchase, and Kabbage will create a loan with the same rates and terms as a traditional line of credit draw. There are no additional fees, and anyone that qualifies for a line of credit can request a Kabbage Card at no cost.

Fundbox has a very similar application process. Start by signing up on the website with your name, business email, phone number, and a password. You will also be required to select the annual revenue of your business.

The next step involves linking an account so that the lender can analyze the performance of your business. If you have invoices, you can link your accounting software. If you do not invoice customers, you can qualify for a line of credit by linking your business bank account.

During the application process, a soft pull on your credit is performed. This will not affect your credit score. However, if you are approved for a line of credit and take funds, a hard pull may be performed.

Most borrowers will know within minutes if they are approved and the amount of the credit line. Once approved, you’ll be able to request funds immediately. Those funds will hit your bank account within 1 to 3 business days. Your linked bank account will be used for automatic drafts of your weekly payments.

Kabbage and Fundbox have similar application processes. Both are automated, easy, and can provide you with instant approvals. In this category, the win came down to the Kabbage Card. The ability to easily sign up for the Kabbage Card, which gives you access to your credit line anywhere Visa is accepted, gives Kabbage the edge.

And The Overall Winner Is …

Although Kabbage and Fundbox have similar product offerings, Fundbox comes out on top. Its relaxed borrower qualifications, invoice financing service, and competitive rates and terms make it a top choice for many small business owners.

However, you may find that Kabbage’s monthly payments, longer repayment terms, and access to fast cash with the Kabbage Card are more suitable for your small business.

Which Is Best For Your Business?

While Kabbage and Fundbox appear similar on the surface, there are a few clear differences that can help you make your choice between the two. The biggest differences to note include:

  • Kabbage payments are made monthly, while Fundbox has a weekly repayment schedule
  • Maximum borrowing limits
  • Time in business requirements
  • You can use your unpaid invoices to qualify for a line of credit through Fundbox

Choose Kabbage If…

  • You need a line of credit that exceeds $100,000
  • You feel more comfortable making monthly payments
  • You’ve been in business for at least one year
  • You want payment terms up to 12 months
  • You want to make instant purchases using the Kabbage Card

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Choose Fundbox If…

  • You’d prefer to make weekly payments instead of one larger monthly payment
  • You’ve been in business for less than one year
  • You want to use your unpaid invoices to receive a line of credit

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Final Thoughts

Kabbage and Fundbox both offer value to small business owners that may not qualify for traditional business financing options. Although the cost of borrowing may be higher than other financial products, the speed of approvals and transfers, the ease of application, and the low borrowing requirements may be worth the extra expense for the business owner seeking fast funding.

Still on the fence? Learn more about lines of credit and accounts receivable financing to determine which — if either — is the best financial option for your business.

The post Kabbage VS Fundbox: Which Lender Is Best For Your Small Business? appeared first on Merchant Maverick.

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How To Use Your Kabbage Line Of Credit

As a business owner, you always have to be prepared for the unexpected. An emergency arises, a bill needs to be paid, you’re running out of inventory … you get the picture.

Have you ever found yourself in a situation where you know you don’t have enough funds to comfortably cover the expense? Have you struggled to deal with that knot in your stomach and a constant feeling of dread wondering how you’ll get the capital you need? You’re not alone.

Or maybe you’re facing an entirely different challenge: business expansion. You’re ready to grow your business, but unfortunately, all of your funds are tied up in operational costs and other expenses. How can you expand your business and boost your revenue if you don’t have the capital you need?

Fortunately, there’s a solution when you need cash quickly: a small business line of credit. With a line of credit from an online lender like Kabbage, you don’t have to worry about waiting for days (or even weeks) to get an approval from a lender.

Kabbage specializes in small business lines of credit up to $250,000. You can use your line of credit for any business expense, from buying supplies and inventory to paying a utility bill or covering payroll expenses. Kabbage’s flexible lines of credit can be used for emergency expenses or to expand your business.

If you have credit challenges, it’s no problem — Kabbage looks at the performance of your business when issuing approvals. Once you’re approved, you can immediately make draws from your line of credit, getting the money you need as soon as the next business day.

In this article, we’ll do a deep-dive into Kabbage lines of credit. From the application process to withdrawing funds, we’ll cover it at all to help you determine if your business should explore this financial path.

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Apply For A Kabbage Line Of Credit

Requirement Minimum requirement
Time In Business: 12 months
Personal Credit Score: N/A
Revenue: $50,000 per year (or at least $4,200 for the last 3 months)

The first thing to do when applying for a Kabbage line of credit is determining whether you qualify. Most business owners will find that qualifying for Kabbage’s line of credit is much easier than qualifying for other financial products. To be eligible, you must meet two minimum requirements:

  • Be in business for at least 12 months
  • Have at least $50,000 in annual revenue or at least $4,200 per month over the last 3 months

Because Kabbage issues lines of credit based on the performance of a business, there are no minimum personal credit scores required to qualify. However, Kabbage does perform a hard pull on personal credit during the application process.

Step 1: Business Information

Once you’ve determined that you qualify, you can start the online application, which takes just minutes to complete. To get started, the application requests information about your business including:

  • Business Name
  • Business Address
  • Business Phone Number

You will also enter your email address and set a password in this first step. This will be your login information for accessing your account on Kabbage’s website or mobile app.

Next, you will provide more information about your business. This information includes:

  • Industry Type
  • Company Structure
  • Date Established
  • Tax ID Number
  • Annual Revenue

You will be asked if you own at least 75% of equity interest and have significant responsibility in managing the business.

Step 2: Connect Accounts

Next, you will connect to your bank account or business services so that Kabbage can review your transactions to see if you’re eligible for a line of credit. In this step, you add the bank or service with the most revenue transactions. You can add additional accounts and services later.

Kabbage can connect directly with multiple banks including Chase, Wells Fargo, Bank of America, BB&T, Capital One, and SunTrust, just to name a few. You can also connect business services including but not limited to PayPal, Stripe, Sage, Square, eBay, Amazon, and QuickBooks.

Step 3: Personal Information

Once you’ve connected your account, it’s time to provide personal information to Kabbage. This information includes:

  • Name
  • Address
  • Date Of Birth
  • Social Security Number
  • Phone Number

Once you input this information and hit “Submit,” Kabbage will perform a hard pull on your credit. Remember, though, Kabbage focuses on the performance of your business — not your credit score.

Once Kabbage’s system analyzes your credit history and your account transactions, an approval decision will be made. Within minutes, you’ll be able to see if you’ve been approved for a line of credit. Once approved, you’ll have access to the Kabbage Dashboard, which features your full credit limit and options for withdrawing funds. You can withdraw the full amount, or you can select the amount and terms that work for you.

One last thing to note is that Kabbage can automatically approve you for up to $150,000. Higher credit limits up to $250,000 require a manual review.

Review Your Rate & Borrowing Terms

Requirement Minimum requirement
Borrowing Amount: Up to $250,000
Draw Term Length: 6 or 12 months
Borrowing Fee: 1.5% – 10% of the borrowing amount per month
Draw Fee: None
Effective APR: 24% – 99%
Learn more

After you’ve been approved for a Kabbage line of credit, you can use the Dashboard to initiate draws, view information about previous loans, see account details, and view or add linked accounts. Account details show the percentage of funds utilized, your next statement date, your next due date, and the minimum amount due.

To review your rates and terms, select an amount to borrow as if you were initiating a draw. If you’re borrowing $10,000 or more, you can select from 12-month or 6-month terms. Loans less than $10,000 can only be taken with 6-month terms.

Once you’ve selected the amount and terms, Kabbage will provide a breakdown of your payment schedule. This schedule shows the date of each payment, the principal amount that will be paid, the rate charged for that payment, the fee amount, and the total amount due for each month. Below your monthly schedule you’ll find the new loan amount, the total amount of fees you will pay, and the total cost of the loan including principal plus fees.

Kabbage also has a loan calculator on its website if you haven’t yet applied. While you won’t know the specific fees, credit limit, and other details until you apply, this can give you an idea of whether or not this financial product is an option that will work for your business.

Kabbage provides you with a summary of your fees when you initiate a draw, but how is this calculated? The lender charges a monthly fee each month that you have a balance. Fees range from 1.5% to 10% and are based on the performance of your business. This monthly fee is added onto your principal balance, which is divided evenly across 6 or 12 months depending on the terms you selected.

As you pay down your balance, your fees will be reduced. For example, you may pay 3% for the first 6 months of your loan, then pay just 1.25% for the last 6 months. There are no prepayment penalties, so you can pay off early and save.
Kabbage is very transparent about its fees and your total cost of borrowing. On each loan agreement you make with Kabbage, you will find a SMART Box. The SMART Box provides important information including:

  • Disbursement Amount
  • Repayment Amount
  • Term
  • Total Cost Of Capital
  • Annual Percentage Rate (APR)
  • Average Monthly Payment

This gives you an overview of all of the details of your loan, so there’s never any question as to how much you are paying to draw from your Kabbage line of credit.

Optional: Request A Kabbage Card

One of the things that makes Kabbage stand out from other lenders is its Kabbage Card. When you make traditional draws using the Kabbage website or app, funds are transferred immediately to your bank account, but this process may take 1 to 3 business days. What happens if you need instant access to cash?

With most lines of credit, you’re stuck waiting it out until the funds hit your business bank account. But with the Kabbage Card, you can immediately access your line of credit anywhere Visa cards are accepted.

The Kabbage Card allows you to simply swipe to make your purchases. Once you’ve made a purchase with your card, a new 6-month loan will be created. This loan will have the same rates and terms as traditional draws from your line of credit. Kabbage does not charge additional fees to use the Kabbage Card, and your credit will not be affected.

All Kabbage account holders are eligible to receive the Kabbage Card and can receive it by simply logging into their account and requesting the card. Once received, the card is activated through the Kabbage Dashboard and can be put into use immediately to purchase inventory, supplies, pay a bill, or cover emergency expenses. You must apply for a Kabbage line of credit in order to be eligible to receive the Kabbage Card.

Withdraw Funds & Repay Your Loan

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Once you’ve opened your Kabbage line of credit, you’re eligible to take draws immediately. Through the Kabbage Dashboard, you can make a draw on your line of credit in just a few easy steps.

Select the amount you’d like to withdraw up to and including your total credit limit. If you select an amount of $10,000 or more, you’ll be able to choose between 6-month and 12-month terms. If the amount falls under $10,000, only 6-month terms are available.

Once you’ve selected your loan amount and terms, you’ll be able to view your repayment schedule. If you approve of the repayment schedule, you can continue to review the loan. The next step will include reviewing the details of your loan and the linked bank account information. If everything looks good, e-sign the agreement and submit. You should then expect to see the funds in your checking account within 1 to 3 business days.

Kabbage makes it easy to repay your loan by using your linked checking account for ACH withdrawals on your due date. You’ll receive a statement each month approximately two weeks before your due date. On your Kabbage dashboard, you’ll be able to view the date of your next statement, your next due date, and the minimum amount due. This amount will be automatically withdrawn from your business checking account on your due date.

You also have the option to make a manual payment to your account through the Dashboard. You can select the minimum monthly payment, the entire amount, or another amount. This is an option you can use if you would like to pay down your balance or pay your loan off early.

If you have more than one loan, you will still just have one monthly payment. You can learn more about each loan through the “Details by loan” tab in your Kabbage Dashboard. This provides you with an overview of each loan you’ve taken, including the date it was drawn, the original loan amount, and remaining balances.

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Kabbage lines of credit are ideal for business owners who want quick access to cash without a lengthy, difficult application process. However, it is important to note that these lines of credit do come at a cost. Monthly fees added onto your principal balance are steep when compared to low-interest, long-term financing options. However, if you need business capital quickly and without hassles, the return-on-investment may be worth the additional costs. Check out our full Kabbage review to learn more about this lender and its lines of credit.

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