Monthly Archives: November 2016

Should You Know About Merchant’s Guide to Apple Pay

Apple has its hard-core fans and passionate naysayers, but few can argue that the company has a history of inventing technology that changes the way people go about their everyday lives. Not all of its technologies have the seen the success of the iPod, iPhone, and iPad but when Apple introduces a technology, people want to have it.

When Apple introduced the iWatch, it also unveiled Apple Pay. While not as technologically sexy as a futuristic watch, Apple Pay has the potential to change the way people make transactions. Any business owner who receives payments by credit cards should strongly consider Apple Pay or at least know enough about it to make an informed decision.

How does the technology work?

Apple Pay isn’t built on new technology. It uses NFC or near field communication technology to communicate with a payment terminal. Without getting too techno-nerdy, here’s how NFC technology works with Apple Pay:

When the shopper sets up Apple Pay, they enter their credit card information into their mobile device. Apple Pay then creates a device account number—a security code that replaces the card’s actual account number.
A shopper taps their Apple Pay capable device on the NFC payment terminal while touching a sensor.
The NFC terminal creates a security code for the transaction and pairs it with the device account number stored in the phone.
The codes are sent to the bank or payment processor, which sends it to another financial institution if needed.
The codes are matched against other codes to verify the transaction.
A notice of acceptance or decline is sent to the merchant. This entire process is almost instantaneous just like it is with traditional credit card transactions.
As you can see, Apple Pay, and other NFC payment systems operate by creating unique codes that require both the Apple device and payment terminal. Because the payment code is only used once, the payments are more secure—unlike traditional cards.

What do I need to accept Apple Pay?

You need an NFC-capable payment terminal. These cost between $500 and $1,000 per terminal. But here’s why it might make sense to make the investment. On October 15, 2015, a liability shift will take place. If your payment terminal isn’t capable of accepting EMV cards, better known as chip cards, you may be liable for any fraudulent transaction made at your store. For that reason you will probably want to upgrade your payment terminal anyway. You might as well spend a little bit more and purchase a NFC capable terminal to make sure you don’t have to upgrade again in the near future.

Is Apple Pay becoming mainstream?

There’s no doubt that it’s catching on fast. At a March 9 event to promote its Apple Watch, Apple CEO Tim Cook announced that 2,500 card-issuing banks and 700,000 merchants now accept Apple Pay. When the product was unveiled in September of 2014 only 6 issuing banks supported it and less than one-third of the current 700,000 merchants.

Consumers haven’t wildly embraced NFC payment technologies but Starbucks has seen impressive success with its app that allows customers to pay without using a credit card. As cardless payment systems become easier, expect impressive buy in from consumers. There’s no reason to believe that Apple Pay won’t evolve to become a major player in the payment processing market especially with the massive marketing resources Apple is putting behind it.

Is Apple Pay safe and secure?

That’s not an easy question to answer. Hackers will hack. They’ll invest considerable time into figuring out how to crack the system. There’s no way to say that any payment system is 100% safe. NFC payment systems have security vulnerabilities that are well documented but since Apple Pay doesn’t use the actual credit card number, the system might be safer than other NFC systems.

What about the security of having a credit card stored on a phone? Apple’s security technology is among the safest in the world. Hacking an iPhone is no easy task and since no information is sent or stored on Apple’s servers, there is no concern of a data breach coming from Apple.

How To Bookkeeping for Your Business

All businesses need to have a bookkeeping system in place. Bookkeeping is the process of recording and maintaining financial transactions for your business, and it’s a great way to generate a detailed financial overview for your business whenever you need it.

The first reason you need a bookkeeping system is it’s required by law. You need to keep track of your income and expenses for tax purposes. The truth is most business owners don’t understand how to keep a set of accurate books, and many don’t have the time; it’s a task that is usually neglected, which is a big mistake. Accurate bookkeeping will keep you out of trouble and give you an important tool to help your business succeed.

With a complete bookkeeping system in place you can manage the financial health of your company. You can analyze expenses and revenue for any time period and compare it to past results. You will also be able to create budgets that can be compared to actual results. Identifying key areas of over or under spending is vital to keep spending in places that will maximize business success.

RELATED: 9 Small Business Accounting Tips

Business owners should get in the good habit of reviewing their financial information on a monthly or, at a minimum, quarterly basis. What was revenue for the month? For the quarter? How does that compare to other periods? Who are your biggest customers? What is your inventory turnover rate? How much did you spend in marketing? What are the tax implications of your current profits? Review the aging of accounts receivable to identify past due customers (This is one area I see businesses struggle. It’s great to make that sale but unless you collect your money and collect it in a timely manner, your business will be in serious jeopardy. It’s about cash flow!) There are many other reasons to have an up to date accurate bookkeeping system such as financial statement preparation for lenders and investors.

So how do you establish and maintain a bookkeeping system?

There are a great deal of software packages available, some cloud based, that can get the job done: Quickbooks, Xero, Zoho books, Sage One, and Freshbooks are just some of the options available.

As businesses grow, many hire in-house bookkeepers; some are full charge (handle all aspects of bookkeeping) while others are area specific such as invoicing, accounts receivables, payables, payroll or some combination. Outside CPAs are often used to make adjustments, offer advice and prepare all the required returns.

Many smaller companies often hire a bookkeeper/accountant to help. A hybrid system is usually settled on where the company enter data such as invoices and expenses, and the accountant will do some bookkeeping clean up, make adjustments, book payroll, reclassify, offer advice, and do all the necessary filing, which may include payroll, sales tax, and corporate returns.

Your time is valuable and many small businesses should not try to handle all aspects of bookkeeping and tax compliance themselves. It’s often ineffective and could cost you down the line. A good accountant will be of great value. Take the time to find someone who will work with you – not just with your accounting needs – and who cares about your success.

While bookkeeping can be a hassle, it should be viewed as a key component of your business. It’s a great way to protect yourself legally, keeping your business compliant with current tax laws and regulations. Bookkeeping is also a smart technique for analyzing your business’s financial health. Knowing your financial numbers and ratios will help you create strategies that will strengthen your business. Because there are so many options available to you, setting up a bookkeeping system should be your first priority.

Choose the Best Credit Card for Your Business

Looking for a credit card for your small business? There are plenty out there. Every major issuer has a special card for small business owners.

The names might be catchy but how do you pick the right card for your business?

Do You Need a Credit Card?

Money isn’t pouring in yet. You have bills and expenses due today but that big check from a client is running late. A major piece of equipment broke but there isn’t enough money in your bank account to cover the cost. This is when a credit card becomes a lifeline.

As a young startup, you’re not likely to secure a line of credit from a bank or investor. Your best bet is seed money from family or friends but maybe you’ve exhausted that option or you don’t want to give up any equity in the company. A credit card is the perfect way to cover expenses when cash is running low.

Did you know that businesses have a credit file too? Your D&B (Dunn and Bradstreet) score is the business equivalent of a FICO score. In order to build your businesses credit score you have to utilize credit. Since credit is hard to secure at first, the best way to build your score is likely through the use of a credit card.

But be careful. Overspending can lead to disaster. Just as credit cards have driven families into bankruptcy, they can do the same with small businesses. Don’t use a credit card to buy what your business can’t afford. Use it to cover expenses until payments from customers arrive.

How To Find the Right Card

1. Be Realistic

Are you going to pay the charges in full each month? If you are, look at rewards cards. Getting a free flight simply by using your card is a great deal. There are some that offer travel rewards, cash back (in the form of statement credits), and other rewards.

But those rewards are small compared to the interest you pay if you carry over a balance. If you’re paying interest, you’re quickly wiping out any reward you receive.

If you’re going to hold a balance, first look at the interest rate. If you’re disciplined enough to not pay interest, look at the quality of the rewards.

2. Keep Yourself Honest

A credit card and a charge card are different. A charge card requires that you pay the balance in full after a certain period—often after one month. A credit card allows you to roll over the balance month to month. The American Express Plumb card is considered a charge card. It gives you 60 days to pay without any charges and offers a discount if you pay early. After 60 days, charges apply.

3. Look at the Terms

Do you travel outside of the country for your business? Make sure your card doesn’t have a foreign transaction fee. Most don’t but don’t pay up to 3% in fees because you didn’t read the fine print.

4. Be Careful of the Teaser Rates

That 0% introductory APR is certainly enticing but what happens after it expires? Before reading the pretty, colorful ad copy on the credit card’s home page, find the disclosure page—normally a link at the bottom. Read about the rates and fees and then go back and read about the card benefits.

5. Dig Deep Into The Rewards Program

After deciding which type of rewards program fits you the best (travel, cash back, etc.) read the fine print. If you’re looking for travel rewards, make sure the card company offers rewards for your airline of choice. If you’re already a super-double-diamond-high-roller flyer with a certain airline, you want a rewards program that works with that airline.

If you have a lot of vehicles, a credit card that offers bonus points for gas purchases is certainly a plus.

6. How Do Extra Cards Work?

How do you get extra cards for your employees and is there a fee? Can you set spending limits on employee cards? Some business cards come with an impressive list of ways to monitor and limit employee spending. Others are nothing more than an additional authorized user.

7. What are the Penalties?

You don’t plan to make late payments but what if it happens? Do you lose your rewards points? Is there a penalty APR that goes into effect? What is the late fee? Sometimes paying bills a little late is unavoidable. As you’re shopping for a card, compare those terms and conditions as well.

8. Beware the Annual Fee

Some cards have a lot of perks—concierge services, purchase protections, free insurance for your rental car, and more. But is it worth a hefty annual fee?